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September 12, 2008
(See attached file: PR080912.pdf) (See attached file: PR080912.xlsx)

  • Futures closed lower this week amid continued strength in the U.S. dollar and spillover pressure from weakness in outside markets. For the week, the nearby position at the CBOT was down 26 cents/bu, the KCBT was off 32 cents/bu and the MGE finished 32 cents/bu lower. Both corn and soybeans rallied Friday following a bullish crop report to finish the week 16 cents/bu and $3.1/bu higher.
  • The U.S. Department of Agriculture’s September World Agricultural Supply and Demand Estimates (WASDE) boosted world production 6.1 million metric tons (MMT) to 676 MMT. Projected global feed use was increased 4.7 MMT to 124.5 MMT while exports were placed 1.0 MMT higher at 123 MMT. Global ending-stocks were increased 3.7 MMT to 140 MMT bringing the stocks-to-use ratio to 21.4.
  • No changes were made to the U.S. balance sheet in today’s WASDE report. U.S. wheat crop projections will be updated in USDA’s Annual Small Grain Summary scheduled for release Sep 30.
  • Statistics Canada’s stocks of grain report placed Canada’s all-wheat stocks, as of July 31, at 4.82 MMT, above trade estimates for 4.3 MMT and USDA’s August beginning stocks forecast of 3.75 MMT. Statistics Canada says stocks are off 29 percent from 2007 and 32 percent from the five-year average. Of the total, durum stocks accounted for 842,000 TMT.
  • Sales of 457,000 MT of U.S wheat this week exceeded trade estimates for 300,000 to 450,000 MT. At 15.5 MMT, current export sales equal 57 percent of USDA’s projected 2008/09 total of 27.2 MMT.
  • Weather developments in Australia and Argentina remain a concern. USDA lowered Australia’s production estimate as below average August rainfall is expected to reduce yields. Similarly, excessive dryness in Argentina during planting and the development stage resulted in USDA trimming production by 1.0 MMT.
  • HRS protein premiums remain high with no indications above 14 protein out the PNW and nearby HRS 14.5 protein out of the Gulf trading 60 cents/bu above 13.5 protein. HRS harvest data indicates slightly lower new-crop average protein of 14.5 against 14.8 the previous year. As exporters are reporting lower protein available to them than indicated by survey data, producers may be storing higher protein HRS hoping to capture higher prices later in the marketing year.
  • Freight continued to move lower this week as the Baltic Dry Index closed at 4800, down over 14 percent since this week, and 45 percent year-to-date. Key routes to Japan continue to soften with PNW and Gulf rates seen $2/MT and $9/MT lower, respectively.
  • The U.S. dollar (USD) continued its strong performance this week gaining against most major currencies. The dollar gained nearly three percent against the euro, five percent against the AUD and one percent versus the CAD. Data released Thursday showing a growing US trade deficit with Japan boosted the yen nearly one percent over the USD for the past week.

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