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August 27, 2010

(See attached file: PR 100827.pdf)(See attached file: PR 100827.xls)

Highlights:
  • Wheat prices were pressured early in the week due to increased rainfall in Russia and Australia. The increased moisture benefited the Russian winter wheat seeding outlook, while Western Australia received some much-needed rainfall for this year’s wheat crop. GASC’s purchase of French and Canadian wheat on Wednesday also pressured prices. Prices climbed higher towards the end of the week following better-than-expected export sales. Overall, futures traded mixed with CBOT falling 16 cents on the week, to $6.62/bu, and KCBT falling 5 cents, to $7.00/bu. MGEX gained 7 cents on the week and closed at $7.07/bu. Chicago soybean prices were up 12 cents from a week ago, to $10.22/bu, following strong export sales and a possible lower-than-expected soybean yield. Corn was unchanged from last week, at $4.21/bu.
  • In the International Grains Council’s (IGC) latest grain report, the IGC dropped their 2010/11 global wheat production outlook by 7.0 MMT, to 644 MMT. Russian production accounted for 6.0 MMT of the decline, with IGC placing Russian production at 44.0 MMT. IGC also reduced Russia’s wheat export outlook to 3.5 MMT, which would be the lowest in 10 years. The IGC increased production prospects for both Canada and the U.S. due to better yields, increasing the Canadian production estimate by 1.0 MMT to 21.5 MMT and the U.S. forecast by 1.5 MMT to 61.5 MMT.
  • The Ukrainian government announced on Wednesday that there is currently no need to implement a grain export quota, but will reevaluate the situation on September 15. However, the Ukrainian Customs Service will maintain its additional quality checks for wheat exports implemented earlier this month.
  • USDA’s Moscow office reported Russia’s 2010/11 wheat crop could fall to 41.0 MMT, which would be 36 percent less than last year’s 61.7 MMT. USDA’s current official estimate stands at 45.0 MMT.
  • Egypt’s government wheat buying agency, GASC, announced a purchase of 180,000 MT of French wheat and 60,000 MT of Canadian wheat on Wednesday. The announcement had a bearish effect on U.S. prices, sending futures sharply lower. The CBOT September contract lost 27 cents on Wednesday, closing at $6.47/bu.
  • PNW FOB values were significantly higher this week due to increased rail rates and limited elevator capacity. FOB basis out of the PNW for HRS 13.5 climbed to $1.75/bu, compared to $1.35/bu a week ago. HRS protein spreads also increased following lower average protein levels from the HRS harvest, which were at 13.9 percent this week compared to 14.2 percent a week ago.
  • Export sales were strong again this week and exceeded traders’ expectations. Sales for the week ending August 19 reached 1,077,600 MT. Increases were reported for unknown destinations (290,000 HRW, 4,750 HRS, 24,500 SRW, -45,750 white, -27,500 durum), Egypt (117,918 HRW, 18,000 HRS), South Korea (19,829 HRW, 18,644 HRS, 519 SRW, 42,318 white), Chile (38,500 HRW, 13,150 HRS, 18,700 white), Indonesia (20,000 HRW, 5,000 HRS, 39,550 white), Taiwan (39,697 HRS, 13,450 white), and Thailand (14,950 HRW, 25,000 HRS, 10,000 white).
  • The Baltic Panamax was down this week, losing 111 points from last Friday’s close and finishing the week at 2,978. Maritime Research’s Grain Freight Index, however, was up for the sixth consecutive week, closing at 546.9, up 4.9 points from a week ago.

File Name
PR 100827.pdf
PR 100827.xls
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