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June 22, 2008

(See attached file: PR 080620.xlsx)(See attached file: PR 080620.pdf)

Highlights
  • Wheat futures finished lower for the week as uncertainty over U.S. corn and soybean production, drought in Australia, quality problems in U.S. and European winter wheat, political turmoil in Argentina and continued stout import demand factored while recent tenders suggest global supplies are ample through the near term, allowing prices to moderate. After strengthening through Wednesday on continued rains in the Southern Plains and flooding in the Midwest, grains and oilseeds moved lower when a policy change in China brought crude oil prices crashing down nearly $5/barrel. For the week July delivery positions at the CBOT fell 16 cents/bu and the KCBOT was down 9 cents/bu. The MGE nearby continues to move in its own direction, rising nearly 38 cents/bu, while corn nearbys were off 11 cents/bu and soybeans fell 28 cents/bu.
  • Export sales continue to exceed expectations with 538,000 MT added to the books last week, taking the total above 8 MMT compared to 5 MMT by this point last year. Brazil and Nigeria made sizeable HRW purchases while Japan continues its unusually aggressive pace. Egypt cancelled its tender this week without explanation, but results showed SRW was offered nearly $30/MT above Black Sea supplies into that market. SRW export demand remains extremely weak.
  • Rains in the Southern Plains continue, favorable for headfill in northern parts of the region while delaying harvest and causing quality concerns in the south. The effects the rain will have on this year's harvest remain unknown, but some fusarium infection has been reported in Kansas. Precipitation on ripe wheat can also cause sprouted kernels, low test weights and protein levels. On the bright side, average protein levels have been increasing as the harvest progresses into western Texas and Oklahoma, decreasing domestic protein premiums although export premiums remain high.
  • Ocean freight rates unchanged despite falls in the paper market. The Baltic Dry Index was off nearly 5% this week but freight owners reportedly are waiting for a rally, keeping rates generally stable from last week.

File Name
PR 080620.xlsx
PR 080620.pdf
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