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October 22, 2010

(See attached file: PR 101022.pdf)(See attached file: PR 101022.xls)

Highlights:
  • Wheat prices traded lower this week, pressured by a stronger dollar and a favorable forecast for rains across the Great Plains. The dollar surged on Tuesday following a cut in China’s interest rate, sending commodity prices lower. The CBOT nearby contract lost 18 cents following the announcement. Overall, CBOT December contract was down 33 cents on the week, closing at $6.70/bu. KCBT nearbys lost 26 cents, to $7.19/bu, while MGEX was down 25 cents, to $7.28/bu. Soybean prices continued gaining this week, supported by strong export demand from China. The CBOT soybean contract gained 14 cents, closing at $11.99/bu. Corn prices were down slightly, losing 3 cents to close at $5.60/bu.
  • Timely rains continue to benefit the Argentine wheat crop. The Buenos Aires Grain Exchange increased their 2010/11 Argentine wheat output projection for the third consecutive week, placing this year’s crop at 12.1 MMT, up from the range projected last week of 11.3-12.0 MMT.
  • The Ukrainian government put grain export quotas into effect this week. The quotas will total 2.7 MMT, which include 500,000 MT for wheat.
  • The Russian government announced today that their grain export ban will remain in place until July 1, 2011. Russia imposed the ban on August 15 due to the extreme drought conditions experienced this summer.
  • FOB basis in the Pacific Northwest is higher this week due to extremely tight loading capacity. Basis is especially firmer for higher protein wheat due to low protein levels in this year’s HRS crop. Basis for northern spring (NS) 14 percent protein out of the PNW currently stands at $3.50/bu, compared to $3.25/bu a week ago. Traders are not making offers for dark northern spring 14 percent protein.
  • The CBOT SRW/corn spread continues to narrow due to stronger corn prices. The spread for the nearby CBOT December contract stood at $1.10/bu on Friday, down from $1.41/bu a week ago.
  • Winter wheat planting made significant progress this week due to dry weather. USDA pegged this year’s winter wheat planting campaign at 80 percent complete, up from 70 percent a week ago and above the five-year average of 77 percent. Planting progress could slow in the upcoming week with the forecast calling for rain.
  • The Dollar Ice Index was higher this week, gaining support from a surprise cut in China’s interest rate on Tuesday. The dollar gained two percent immediately following the announcement, reaching 78.18, but then fell back down once the news settled in. On Friday, the Dollar Ice Index stood at 77.40, up from 77.04 a week ago.
  • The Baltic Panamax Index was softer again this week, falling to 2,219, which is down from 2,254 a week ago. The Gulf/Japan route fell $2/mt to $57/mt, while PNW/Japan was unchanged at $32/mt.

File Name
PR 101022.pdf
PR 101022.xls
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