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December 10, 2010

(See attached file: PR 101210.pdf)(See attached file: PR 101210.xls)

Highlights:
  • Wheat futures traded mixed this week, with KCBT and MGEX nearbys making gains, while the CBOT December contract made its first weekly loss in three weeks. Ongoing dry conditions in the Great Plains and quality concerns over Australia’s wheat crop pushed high-protein wheat contracts up. MGEX nearbys gained 37 cents on the week, closing at $8.54/bu, while the KCBT December contract gained 10 cents, to $8.22/bu. CBOT nearbys, pressured by a stronger dollar and USDA’s increased wheat stocks estimate, lost 2 cents this week, to $7.35/bu. CBOT soybean prices fell this week by 27 cents, to $12.37/bu, due to a stronger dollar and rumors that China may delay some shipments. Corn nearbys gained 1 cent on the week, to $5.60/bu.
  • USDA released their World Agricultural Supply and Demand Estimates (WASDE) this week. USDA increased their 2010/11 global wheat production forecast by 3.6 MMT, to 647 MMT, primarily due to an increased projection for Canada, Australia, and Pakistan. The export outlook for Canada and Australia were both reduced, to 17.0 MMT and 15.0 MMT, respectively, due to the lower quality in their crops this year. Global ending stocks for 2010/11 are projected at 177 MMT, 4.0 MMT greater than USDA’s previous estimate.
  • The Australian Bureau of Agricultural and Resource Economics (ABARE) released its latest crop report this week. ABARE projected 2010/11 Australian wheat production to reach a record 26.8 MMT, 22 percent greater than last year’s production. However, ABARE noted that due to heavy rainfall, protein levels are lower and a larger portion of the crop will be downgraded to feed wheat. ABARE reduced its export outlook from 18.4 MMT to 16.0 MMT.
  • The Ukrainian government announced it will extend its grain export quotas until March 31, 2011. The quotas were set to expire at the end of the calendar year. The proposal for the quota extension includes an additional 500,000 MT of wheat, placing the total wheat export quota at 1.0 MMT through March 31.
  • The Buenos Aires Grain Exchange increased their 2010/11 Argentine wheat outlook, forecasting production to reach 13.0 MMT. This is up from their previous forecast of 12.7 MMT. USDA currently projects Argentine production to reach 13.5 MMT.
  • The Chinese government said that 17 percent of its winter wheat crop has been affected by drought conditions. The Chinese Ministry of Water Resources forecasts the drought to last until spring, but it is too early to tell how production will be affected. The agriculture ministry currently estimates China’s winter wheat planted area at 22.7 million hectares.
  • The decision by China’s Central Bank on Friday to increase bank reserve requirements pressured commodity prices. It was the third time this month that Chinese reserve requirements were increased in an effort to curb inflation.
  • A stronger dollar helped give CBOT nearbys their first daily loss in two weeks on Tuesday. The ICE Dollar Index was at 80.13 on Friday, up from 79.38 a week ago.
  • The Baltic Panamax Index was down slightly from last week, dropping 25 points to close at 2,357. Destination routes were unchanged.

File Name
PR 101210.pdf
PR 101210.xls
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