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July 6, 2007

(See attached file: PR070706.pdf)(See attached file: PR070706.xls)

Highlights
  • Futures fell the first half of the week on follow-through technical selling as markets ignored bullish fundamentals indicating global production problems, shrinking stocks and strong import demand. On Tuesday's close July futures were off 13 to 14 cents/bu from Friday in all 3 exchanges. Reports of production problems and import purchases kept coming on the U.S. holiday, pushing markets back up. Optimistic production estimates released today by Informa Economics did not cause markets to fall. For the week, CBOT September futures climbed 13 cents/bu, the KCBT 8 cents/bu and the MGE fell 5 cents/bu. Corn futures were up 2 cents/bu.
  • Despite continued rains in the Southern Plains, USDA's weekly crop conditions report did not show a significant decline in winter wheat conditions, although the HRW harvest is well behind average. Crop ratings actually improved in Kansas and the HRS crop continues to look great. Samples from the Southern Plains analyzed for the USW harvest report show a large decline in average protein from last year. Export bids on HRW above 11.5% protein are not being quoted from Gulf ports, shifting high protein import demand to spring wheat. Protein scales will vary widely among traders until crop composites become clearer. Nearby HRW basis prices in the PNW doubled this week.
  • Importers that had been waiting for prices to fall before putting on coverage seem to have accepted the new price environment. India is the exception, asking traders to resubmit lower bids on its 1 MMT tender. Several sales over 100,000 MT were reported on the USDA daily mandatory reporting system and export sales continue to exceed trade estimates.
  • Durum prices are at record highs. The price range was revised up another 12% this week, now 29% higher than a month ago and 65% higher than this week last year. Bids from Lakes ports range from $8.70 to $8.98/bu ($320 to $330/MT).
  • Ocean freight rates continued up this week, setting new records. Logistical problems and congestion at Newcastle Australia slowing coal and iron ore loading is absorbing vessel capacity causing rates to climb. Rates in the Atlantic are $4/MT higher than last week and the Pacific up $8/MT, double rates paid this week last year. In just 3 weeks rates have soared $18 in the Atlantic and $17/MT in the Pacific.
  • The dollar is broadly lower, approaching parity with the Canadian dollar and nearing the record low against the euro. Oil surged to an 11-month high above $76/barrel today, putting the market within reach of the record set last August.


National Agriculture Statistics Service Weekly Crop Progress Report:
http://usda.mannlib.cornell.edu/usda/current/CropProg/CropProg-07-02-2007.pdf

USW Harvest Report:
http://www.uswheat.org/harvestReports/doc/0392AF2D3BCD5D9285257310005F66ED?OpenDocument#

Foreign Agriculture Service Export Sales Highlight:
http://www.fas.usda.gov/export-sales/highlite.htm

File Name
PR070706.pdf
PR070706.xls
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