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January 6, 2012

(See attached file: PR 120106.pdf) (See attached file: PR 120106.xls)
  • Following a significant rally in the last two weeks of 2011, gains were mostly nullified this week as all three wheat futures contracts finished lower. A much stronger dollar and renewed concern surrounding the European debt crisis pressured prices, particularly on Thursday. The MGEX March contract saw the biggest loss, down 48 cents to close at $8.01/bu. KCBT lost 37 cents on the week to close at $6.80/bu and CBOT closed at $6.25/bu, down 27 cents. The nearby CBOT corn contract closed down 3 cents at $6.44/bu and the CBOT Soybean contract closed at $11.97/bu, 2 cents lower than last Friday.
  • U.S. commercial sales hit a marketing year low in the week ending December 29, 2011. Net sales of 138,600 MT for the 2011/2012 marketing year were down 68 percent from the previous week and 64 percent from the prior 4-week average, and below trade estimates of 300,000 to 450,000 MT.
  • The Buenos Aires Grain Exchange increased its 2011/12 Argentine wheat production estimate this week to 14.0 MMT, up from its previous estimate of 13.6 MMT. USDA’s current projection for Argentine production is 14.5 MMT.
  • Weather concerns plague several top wheat producing areas in North America. Following flood conditions in 2011, precipitation in the Canadian prairie is well below normal, particularly in Alberta, Saskatchewan and Manitoba, which have received less than 40 percent of normal precipitation in the past three months. Unusually warm weather this week in the drought stricken U.S. plains melted a much needed snow cover, reviving concerns that dry conditions will persist in 2012.
  • Last Friday, Agricultural analyst UkrAgroConsult reduced its 2011/12 forecast for Ukrainian wheat exports from 9.7 MMT to 7.6 MMT. The group attributed the export cut to the likelihood that Ukraine will increase its year ending stocks from 2.9 MMT to 5.0 MMT ahead of a potentially small 2012 wheat harvest. Ukraine’s farm minister said in December that the country could export only 6.0 MMT in order to build adequate wheat stocks.
  • The ICE Dollar Index closed lower on Tuesday but gained 1.6 percent to close at 81.60 on Friday, up from 80.52 last week. The stronger dollar contributed to significant losses in wheat futures on Thursday, when the CBOT, KCBT and MGEX March contracts lost 21, 28 and 20 cents on the day, respectively.
  • The Baltic Panamax Index fell for the third week in a row. Brokers and analysts expect a steady decline in prices in January, which is typically a slow season. The index closed at 1,571 on Friday, down from 1,676 two weeks ago. Maritime Research’s Grain Freight Index was lower for the fourth week in a row this week, falling from 493.8 last week to 483.0.

File Name
PR 120106.pdf
PR 120106.xls
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