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July 29, 2011

(See attached file: PR 110729.pdf)(See attached file: PR 110729.xls)

  • Futures traded lower this week as favorable weather conditions for row crops weighed on wheat prices. A rally in the dollar late in the week and end-of-the-month profit taking also pressured prices. The CBOT September contract lost 19 cents from a week ago, closing at $6.72/bu, while the KCBT nearby contract lost 13 cents, to $7.67/bu. MGEX futures were also lower, but losses were limited by reported yields from the spring wheat quality tour that fell below trade expectations. The MGEX September contract fell by seven cents, to $8.30/bu. Corn and soybean prices saw sharper declines this week as beneficial rainfall hit the Midwest. The CBOT September corn contract fell by 24 cents, to $6.65/bu. The CBOT August soybean contract was down 32 cents from a week ago, to $13.48/bu.
  • In its latest market report, the International Grains Council (IGC) increased its 2011/12 global wheat production estimate to 674 MMT, up 8.0 MMT from last month’s projection. The increase was primarily due to better-than-expected yields for the EU, Russia, and US. The IGC raised the EU soft wheat outlook by 4.1 MMT from the previous forecast to 128.9 MMT, while the Russian outlook was raised by 2.0 MMT, to 56.0 MMT. The US crop is currently pegged at 57.0 MMT, up 1.5 MMT from last month. The IGC also made a sharp increase in its 2011/12 global wheat consumption forecast due to greater feed use. The IGC expects 2011/12 wheat consumption to reach 676 MMT, up 6.0 MMT from its previous estimate.
  • Western Australia’s 2011/12 wheat production could surpass 9.0 MMT, according to trade estimates. Last year, the province’s wheat production reached only 4.7 MMT due to drought conditions. The Australian Bureau of Agricultural and Resource Economics and Sciences currently pegs Western Australia’s wheat production at 8.0 MMT.
  • The Buenos Aires Grain Exchange reduced its 2011/12 Argentine wheat planted area forecast from 4.7 million hectares to 4.6 million hectares. Earlier this month, the Exchange had reduced its planted area outlook from 4.95 million hectares due to planting delays caused by increased rainfall.
  • The Russian Grain Union said this week that it expects Russia’s 2011/12 wheat crop to reach 58.0 MMT, up significantly from last year’s 41.5 MMT. This would also be up from the five-year average of 52.3 MMT, but still below 61.8 MMT produced in 2009/10.
  • The annual spring wheat crop quality tour took place this week in North Dakota and neighboring states. Tour participants pegged the 2011/12 hard red spring yield at 41.5 bushels per acre (bpa), below both trade expectations of 42.2 bpa and last year’s 46.1 bpa. Durum yields were also lower, with the estimated yield reported at 31.8 bpa, below trade estimates of 38.2 bpa and down sharply from last year’s 42.4 bpa.
  • PNW FOB basis for HRS was lower this week due to improved logistics and increased farmer selling. HRS 13.5 protein stood at $2.30/bu this week, down from $2.50/bu last week. Basis for HRS 14.0 protein fell from $3.50/bu to $3.20/bu.
  • The ICE Dollar Index tumbled early in the week, reaching its lowest point since May 4 of this year at 73.47. The dip in the dollar provided support to commodity prices on Monday and Tuesday, but a rally late in the week pressured prices. Overall, the ICE Dollar Index stood at 73.85 on Friday, down from 74.20 a week ago.
  • The Baltic Panamax Index fell for third consecutive week, falling from 1,535 a week ago to 1,511 on Friday. The Baltic Dry Index fell to a three-month low at 1,264, down from 1,323 last week. Maritime Research’s grain freight index was also down, falling by 7.6 points to its lowest point since March 5, 2011 at 543.8.

File Name
PR 110729.pdf
PR 110729.xls
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