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July 13, 2012


(See attached file: PR 120713.pdf) (See attached file: PR 120713.xls)

Highlights:
  • Wheat futures made strong gains for the fourth straight week. Wheat markets pulled strength from the corn and soybean markets, which rose amid worries that dry weather will cut crop yields. USDA’s monthly WASDE advanced those concerns by cutting its U.S. corn production forecast by 12 percent, providing further support for grain markets. Reduced wheat production outlooks in the U.S. and Black Sea regions also fueled wheat markets throughout the week. In addition, concerns that adverse weather around the world could limit supplies of high-protein wheat supported the HRW and HRS contracts. CBOT and KCBT each gained 51 cents on the week to close at $8.42/bu and $8.41/bu, respectively. MGEX gained 22 cents to $9.35/bu. CBOT corn gained 13 cents to $7.55/bu and CBOT soybeans closed at $16.42/bu, a 22 cent increase.
  • Since June 1, the CBOT July contract has gained 38 percent, KCBT gained 31 percent and MGEX is up 26 percent. The CBOT July corn contract gained 37 percent and CBOT soybeans gained 22 percent in the same period.
  • In its monthly WASDE report, USDA lowered wheat and corn production estimates more than industry analysts expected. USDA put 2012/13 world wheat production at 665 MMT, down from the June estimate of 672 MMT and 4 percent lower 2011/12 production of 694 MMT. USDA lowered the Black Sea production forecast 7 percent to 75.0 MMT, down from 101 MMT last year. Changes for the U.S. were comparatively modest. The U.S. production forecast decreased from 60.8 MMT to 60.5 MMT. Expected U.S. exports increased from 31.3 MMT to 32.7 MMT because of the lower Black Sea production outlooks. USDA reduced its world corn production estimate from 950 MMT to 905 MMT because of ongoing drought conditions in the U.S. The reduced wheat and corn production forecasts proved bullish for markets on Wednesday and Thursday.
  • Analyst Strategie Grains on Thursday cut its 2012/13 EU wheat production estimate, citing drought conditions in Spain and Central Europe and excessive rainfall in the UK. The group lowered its June estimate of 124.2 MMT to 123.6 MMT, which would be 4 percent below 2011/12 production of 128.9 MMT. The export forecast increased 1.7 MMT to 15.2 MMT, reducing carry-out stocks from 10.4 MMT to 8.1 MMT. These projections are well below the USDA WASDE estimates for the EU of 133 MMT production and 12.5 MMT of carry-out stocks. The bullish report supported U.S. and European markets.
  • The Baltic Panamax Index closed at 1,202, up from 1,157 last week. The index has gained 34 percent since June 1. Higher demand for Capesize and Panamax vessels supported the index, but physical rates did not move as much as the index. Maritime Research's Grain Freight Index increased to 520.0, up from 516.2 last week.
  • The ICE Dollar Index decreased slightly this week, closing Friday at 83.47, down from 83.56 last week.


File Name
PR 120713.pdf
PR 120713.xls
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