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February 10, 2012

(See attached file: PR 120210.pdf) (See attached file: PR 120210.xls)

  • Wheat futures fell sharply this week despite no new fundamental news. Traders worked to cover short positions and slightly improved weather forecasts in key EU and Black Sea producing countries pressured prices. Lingering effects from Russia’s decision to extend exports limits and a lack of bullish news in USDA’s WASDE report also pressured prices. HRS protein premiums have collapsed some in the last few weeks due to increased sales of higher protein new crop. CBOT March wheat contract lost 31 cents on the week to close at $6.30/bu, 2 cents lower than the CBOT corn contract. KCBT closed 40 cents lower at $6.73/bu and MGEX finished at $8.14/bu, a 24 cent loss. The CBOT nearby corn contract closed 13 cents lower at $6.32/bu and CBOT soybeans closed at $12.29/bu, a 4 cent loss.
  • USDA released its monthly agricultural supply and demand estimates on Thursday. World wheat supplies are at an estimated record 894 MMT, a 2.0 MMT increase from last month. World trade is up 900,000 MT to 140 MMT. Export reductions for Ukraine, Canada, and India are more than offset by increases for Russia, the United States, Argentina, and Brazil. The estimates did not surprise analysts but the bearish numbers weighed on prices on Thursday and Friday.
  • U.S. commercials sales hit a marketing year high of 707,900 MT this week, exceeding trade expectations of 450,000 to 650,000 MT. Total sales for the 2011/12 marketing year, through February 2, 2012 were 22.4 million metric tons (MMT). Buyers have taken advantage of competitive U.S. soft wheat prices in the last month. USDA forecasts 2011/12 U.S. wheat exports (including donations) to reach 26.5 MMT.
  • Ukraine’s Farm Ministry asked grain traders this week to exclude wheat from their list of priority exports and to focus instead on corn and barley. The ministry said it was important to prevent large volumes of wheat exports since it will be critical in supporting domestic market. The move indicates that the government is preparing for low production levels in 2012/13. According to official data, drought damaged about one third of the winter wheat crop sown for the 2012 harvest. Traders said that a small wheat crop in 2012 could force the government to intervene in the market. Agricultural analyst UkrAgroConsult said this week that it expects Ukrainian wheat production will fall to 13.7 MMT in 2012/13, down from 22.3 MMT in 2011/12. The group reduced an earlier estimate of 14.5 MMT due to the drought conditions. UkrAgoConsult does not expect the lower production to remove Ukraine from the export market thanks to sufficient ending stocks from 2011/12. The group projects Ukrainian wheat exports in 2012/12 at 6.3 MMT, down from an estimated 7.0 in 2011/12.
  • French farm office FranceAgrimer on Tuesday published its acreage projections for the 2012/13 harvest season. It projects soft wheat acreage to increase by 1.6 percent to 5.08 million hectares and durum (hard wheat) acreage to increase by 1.2 percent to 425,650 hectares.
  • The Baltic Panamax index closed higher for the first time in six weeks thanks to higher freight rates for March forward. Increased demand out of both the gulf and PNW supported freight prices. The index closed at 967 on Friday, up from 693 last week. Maritime Research’s Grain Freight Index fell for the eighth week in a row from 505.4 to 503.0.
  • The ICE Dollar Index closed higher for the second week in a row this week at 79.13, up from 79.06 last Friday, but remains near its lowest point since mid-November.

File Name
PR 120210.pdf
PR 120210.xls
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