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December 27, 2010

(See attached file: PR 101227.pdf)(See attached file: PR 101227.xls)

Highlights:
  • Wheat prices traded higher last week as ongoing dry conditions in the Great Plains continued to threaten the U.S. winter wheat crop. Russia’s consideration of extending their grain export ban and technical buying also supported prices. Futures prices reached a four and a half month high on Wednesday, with CBOT nearby prices gaining 18 cents and closing at $7.83/bu. However, a stronger dollar and China’s decision to increase interest rates pushed prices back down slightly. Overall, CBOT nearbys have gained 23 cents since December 17 and closed at $7.80/bu on Monday. KCBT nearbys gained 32 cents, closing at $8.43/bu, while MGEX nearbys closed at $8.66/bu, up 24 cents. Dry weather in Argentina pushed soybean and corn prices higher. CBOT soybean nearbys gained 74 cents since Dec. 17, closing at $13.73/bu on Monday. Corn prices gained 18 cents, to $6.15/bu.
  • The Russian Grain Union stated last week that it will consider extending the Russian grain export ban beyond July 1, 2011. The Union said that an extension might be necessary due to delayed fertilizer deliveries which are putting spring crops at risk. Independent analyst SovEcon estimated the 2010/11 Russian wheat crop at 41.5 MMT, a 33 percent decline from last year’s crop.
  • Ukraine’s State Statistic Committee estimated 2010 winter wheat planted area at 6.6 million hectares, a two percent decline from last year’s 6.7 million hectares. The agency estimated that Ukraine’s total 2010 grain sowings fell by 5.5 percent from last year’s 8.6 million hectares.
  • The Food and Agriculture Organization (FAO) increased their 2010/11 global wheat production forecast on Wednesday. The FAO increased their estimate by 5.0 MMT, largely due to increased yields in Australia. FAO projects 2010/11 global output at 653 MMT, 6.0 MMT greater than USDA’s current estimate of 647 MMT.
  • China’s central bank raised interest rates for the second time in just over two months in its efforts to curb inflation. The move sent commodity prices lower and wheat prices fell from their four and a half months highs reached last week.
  • The dollar was stronger again and provided downward pressure to wheat prices. The dollar reached a three-week high of 80.73 on Wednesday and closed at 80.47 on Friday, up slightly from the previous week (80.37).
  • Freight rates were down again this week as a large supply of vessels continues to weigh on the market. The Baltic Panamax Index closed at 1,845 last week, down from 2,037 on December 17. Maritime Research’s Grain Freight Index stood at 546.6, down three percent from a week ago and its lowest point since August 21.

File Name
PR 101227.pdf
PR 101227.xls
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