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February 29, 2008

(See attached file: PR 080229.pdf)(See attached file: PR 080229.xlsx)

  • U.S. futures markets continue to be chaotic, exhibiting astounding volatility. The Minneapolis March contract closed $4.75/bu ($175/MT) higher on Monday but fell $1.00/bu the balance of the week. Strong import demand from the Middle East and increased government restriction on exports supported old crop prices. Egypt lowered its quality specifications to increase its import options, Japan cancelled a tender and a U.S. fund liquidated $142 million in "unauthorized" positions by a rogue trader, keeping prices under pressure. For the week, nearbys at the CBOT were up 24 cents/bu and the KCBOT rose 63 cents.
  • New crop price gains were limited by optimistic projections for the 2008 harvest from the International Grains Council and favorable weather in Europe and Australia. Reports of dry conditions in China, India and the U.S. Southern Plains supported. For new crop positions, July delivery in Chicago and Kansas were up 14 and 24 cents respectively while Minneapolis gained 5 cents in the September position.
  • Export sales this week netted 308,600 MT, 3.5 times the 75,000 MT average needed in the next 15 weeks to reach the USDA commercial sales forecast. A 400,000 MT sale of U.S. HRW was booked by Iraq yesterday. Nearly 7 MMT of sales have not yet shipped, about 70% higher than the 10-year average of outstanding sales committments.
  • The International Grains Council updated its 2008/09 forecast, increasing world wheat production to 646 MMT, up 4 MMT from last month's projections and 7% higher than this year.
  • The Egyptian government lowered quality specifications in order to allow imports of low test weight, high moisture French wheat. Despite the bearish implications for SRW, basis offers of that class rose significantly this week with traders citing tight supplies of exportable quality.
  • Domestic HRS basis prices reportedly fell by $3/bu in two days as mills report full nearby coverage. Export basis prices are down slightly this week.
  • SW offers remain unchanged for a third week as exporters wait to price remaining supplies.
  • Government intervention in exports this week included Argentina extending its export registry closure, Ukraine making moves to extend its closure while the Kazakh agriculture minister suggested to reporters that some form of export limitation was imminent.

File Name
PR 080229.pdf
PR 080229.xlsx
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