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November 12, 2010

(See attached file: PR 101112.pdf)(See attached file: PR 101112.xls)

Highlights:
  • Wheat prices traded sharply lower this week, receiving pressure from a favorable weather forecast in the Great Plains, a stronger dollar, and the news that China may increase interest rates. The CBOT December contract fell 34 cents on Friday due to the possibility of an increase in Chinese interest rates, pushing the contract to a one-month low. Overall, CBOT nearbys lost 59 cents on the week, closing at $6.69/bu. KCBT nearbys were down 56 cents, to $7.30/bu, while MGEX lost 52 cents, to $7.44/bu. Corn and soybean prices were also down this week, with both falling by the maximum daily limit on Friday. The CBOT corn contract lost 53 cents on the week, closing at $5.34/bu. Soybean losses were minimized due to strong support early in the week, gaining 54 cents on Tuesday following USDA’s surprise reduction in their U.S. soybean yield projection. However, Friday’s 70-cent fall resulted in a 10-cent decline on the week, closing at $12.63/bu.
  • The U.S. Department of Agriculture released their November World Agricultural Supply and Demand Estimates on Tuesday. USDA increased their 2010/11 global wheat production estimate by 1.5 MMT, to 643 MMT. The increase was primarily due to an increased outlook in Australian and Argentine production. USDA raised their Australian production forecast by 1.0 MMT, to 24.0 MMT, and raised the Argentine outlook by 1.5 MMT, to 13.5 MMT. USDA lowered their U.S. production forecast by 0.4 MMT, to 60.1 MMT, due to a reduced projection for HRS and durum output.
  • Informa Economics released their November acreage estimates, pegging total 2011 U.S. wheat plantings at 56.1 million acres (22.7 million hectares). If realized, this would be an increase of 2.5 million acres (1.0 mh) from 2010. Informa pegged U.S. winter wheat plantings at 39.7 million acres (16.1 mh), which is up five percent from a year ago.
  • A forecast for beneficial rainfall across the Great Plains pressured futures prices this week. Persistent dry weather has been a concern, leading to lower crop conditions. USDA downgraded the winter wheat condition again this week, rating 45 percent of the crop in either good or excellent condition, compared to 46 percent last week and 63 percent a year ago.
  • Soft red winter FOB premiums out of the Gulf were firmer this week due to a lack of grain movement. SRW FOB basis for November was at $1.10/bu on Friday, compared to $0.95/bu a week ago.
  • The dollar was stronger this week, pushing commodity prices lower. The Dollar Ice Index climbed higher for six consecutive days, standing at 78.11 on Friday, up from 76.54 a week ago.
  • The Baltic Panamax Index was slightly higher this week due to increased coal purchases from China. The index gained 61 points from last week and closed at 2,365 on Friday. The Baltic Dry Index was lower, however, falling from 2,495 last week to a three-month low this week at 2,313.

File Name
PR 101112.pdf
PR 101112.xls
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