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May 20, 2011

(See attached file: PR 110520.xls)

Highlights:
  • Wheat futures traded sharply higher this week due to ongoing adverse weather conditions for several major wheat exporters. Conditions remain extremely dry across the Southern US Plains, while spring planting progress remains well behind schedule in the Northern US Plains and Canada. Drought conditions continue to plague Western Europe, leading to reduced production forecasts by many analysts for the 2011/12 French wheat crop. The CBOT July contract gained 78 cents this week, closing at $8.06/bu. KCBT nearbys gained 63 cents and closed at $9.33/bu. The MGEX July contract closed limit up on Wednesday and surpassed $10.00/bu for the first time since February 14, 2011. The contract finished the week at $9.99/bu, up 99 cents from a week ago. With corn plantings still behind schedule and many analysts doubtful that plantings will reach USDA’s planted acreage forecast of 92.2 million acres, CBOT corn futures traded 78 cents higher on the week, to $7.59/bu. Soybean futures rallied by 50 cents from last week, to $13.80/bu.
  • French analyst Agritel reduced their 2011/12 French wheat output projection do to the ongoing drought conditions in Western Europe. Agritel projected French total wheat production at 31.7 MMT, which would be a 12 percent decline from 2010/11.
  • The Ukrainian government approved a measure to replace their grain export quotas with export duties this week. The duties will become effective next month after it is signed by the President and published. The duties initially proposed last month include a nine percent export duty for wheat and would last through December 2011.
  • The Government of Saskatchewan reported 2011 total crop plantings at 23 percent complete, down from the average of 44 percent for Canada’s largest crop-producing province.
  • US spring wheat plantings remain well behind schedule. USDA reported spring wheat planting at 36 percent complete, the slowest pace since 1996 and well below the five-year average of 76 percent complete.
  • US winter wheat conditions continue to deteriorate. USDA reported 44 percent of the US winter wheat crop in poor to very poor condition, compared to 42 percent last week.
  • SRW FOB was up again this week due to the logistical problems caused by flooding along the Mississippi River and growing concerns that the excessive rainfall could potentially reduce the quality of this year’s SRW crop. SRW FOB basis for nearby delivery gained 5 cents, from $0.75/bu to $0.80/bu.
  • PNW FOB basis for HRS 14% protein was lower this week due to limited export demand. FOB basis was down $0.10/bu, to $3.90/bu.
  • The spread between MGEX/CBOT July futures has climbed sharply in recent weeks. The spread stood at $1.93/bu on Friday, up from $1.72/bu last week and $1.17/bu as recently as April 15. The spread between MGEX/KCBT July contract is also up, from $0.30/bu a week ago to $0.66/bu this week.
  • A weaker dollar supported prices this week. The ICE Dollar Index fell from 75.76 a week ago to 75.47 on Friday.
  • Freight rates were lower again this week. The Baltic Panamax Index closed at 1,666 on Friday, down from 1,720 a week ago. Destination rates were also lower, with Gulf/Japan and PNW/Japan both down $1, to $52/mt and $29/mt, respectively.

File Name
PR 110520.xls
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