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February 24, 2012

(See attached file: PR 120224.pdf) (See attached file: PR 120224.xls)

  • Wheat markets closed lower this week, unable to overcome pressure from increased production estimates by USDA and IGC. Support from a weaker dollar, technical selling and improved weather forecasts helped limit losses. The bearish production numbers had the greatest effect on the MGEX spring wheat contract. MGEX dropped to a 14-month low on Friday to close at $7.86/bu, a 36 cent loss on the week. KCBT lost 9 cents to close at $6.81/bu and CBOT closed at $6.41/bu, a 4 cent loss. The CBOT March corn contract was down 1 cent to $6.41/bu and CBOT soybeans gained 12 cents to close the week at $12.79/bu.
  • On Thursday, USDA updated its 2012/13 wheat plantings forecast to 58.0 million acres, up from a previous forecast of 56.5 million acres and 7 percent greater than 54.4 million acres in 2011/12. Projected harvested acres increased 1.2 million acres to 48.7 million acres, up from 45.7 million acres harvested in 2011/12. Total projected 2012/13 production is 58.9 MMT, up from the previous estimate of 57.7 MMT and 8 percent greater than 2011/12 production of 54.4 MMT. The report pressured prices on Thursday and into Friday.
  • In a report released Thursday, IGC increased its 2011/12 world production estimate by 5.0 MMT to 695 MMT. If realized, it would be 6 percent greater than world production of 653 MMT in 2010/11. IGC also increased projected world trade by 2.0 MMT to 137 MMT and ending stocks from 204 MMT to 211 MMT. Consumption remained the same at 681 MMT. The higher estimates proved bearish for markets on Thursday.
  • Russian Agriculture Minister Yelena Skrynnik said Tuesday that the 94.0 MMT of grain harvested this marketing year (2011/12) is sufficient to meet domestic demand and support exports of 25.0 MMT. The country exported 19.8 MMT of grain through Feb.12. In October, Russian Prime Minister Vladimir Putin said Russia could export no more than 25.0 MMT of grain but the government raised that limit to 27.0 MMT earlier this month saying it saw no need for export restrictions. The agriculture minister on Tuesday would not comment on possible export restrictions after April.
  • Ukraine’s government on Wednesday denied media reports that it had urged grain traders to limit wheat exports in order to protect the domestic market. Agriculture Minister Mykola Prysyazhnyuk said that despite crop damage caused by severe weather, the country will harvest between 42.0 and 50.0 MMT of grain in 2011/12, including 15.0 to 16.0 MMT of wheat, which will meet domestic demand.
  • U.S. commercial sales had the second best week of the marketing year with net sales of 701,600 MT, up 67 percent from the previous week and 25 percent from the prior 4-week average. Total sales for the 2011/12 marketing year, through February 16, 2012 were 23.5 MMT. Declining prices have made U.S. wheat more competitive in the last two months than in the first half of the marketing year. USDA forecasts 2011/12 U.S. wheat exports (including donations) to reach 26.5 MMT.
  • The Baltic Panamax index closed lower this week at 836, down from 949 last week. Freight rates remained mostly unchanged as vessel owners hope for a possible rally in coming weeks. Maritime Research’s Grain Freight Index gained for the first time in ten weeks, up from 494.0 to 502.2.
  • The ICE Dollar Index lost this week to close lower this week at 78.40, down from 79.38 Friday. The weaker dollar supported wheat prices on Friday.

File Name
PR 120224.pdf
PR 120224.xls
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