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January 28, 2011

(See attached file: PR 110128.pdf)(See attached file: PR 110128.xls)

Highlights:
  • Wheat futures were sharply higher early in the week due to strong demand from North Africa. KCBT and MGEX nearbys both reached a two-and-a-half year high on Wednesday. However, gains were limited by profit taking, a favorable weather forecast in the Great Plains, and concerns that political unrest in Egypt, the world’s largest wheat importer, may slow down exports to the country. The CBOT March contract gained one cent from last week, closing at $8.25/bu. KCBT nearbys gained 12 cents, to $9.12/bu, and the higher protein MGEX contract gained 24 cents, to $9.61/bu. Despite strong export sales this week, soybean prices were lower as beneficial rains in Argentina and spillover from Friday’s losses in wheat pressured prices. The CBOT March soybean contract lost 14 cents this week, to $13.98/bu. Corn was also down, falling by 13 cents, to $6.44/bu.
  • Growing demand from North Africa and the Middle East, where high food prices have contributed to civil unrest, pushed wheat prices up early this week. Algeria purchased 800,000 MT of milling wheat on Wednesday, while Tunisia and Jordan also made purchases. Both Iraq and Lebanon issued tenders with results coming next week.
  • A forecast for snow early next week in key hard red winter growing areas weighed on wheat prices Friday. The new HRW crop is currently in poor condition because of ongoing dry weather in the U.S. Plains, but snowfall would provide much needed moisture and protect the crop from winterkill.
  • Argentine port workers began a pay strike on Wednesday in the ports surrounding Rosario, Argentina. The strike was supportive to grain prices, especially soybean prices, as it could potentially delay shipments from Argentina and shift soy demand to the U.S.
  • Export sales were strong again this week and supported prices. Sales for the week ending January 20, 2011 totaled 894,100 MT, with increases reported for Jordan (152,480 HRW), Japan (34,470 HRW, 59,861 HRS, 26,132 white), Egypt (110,000 HRW, 2,750 SRW, -2,579 white), Nigeria (40,000 HRW, 20,653 SRW, 1 durum), Taiwan (1,000 HRW, 53,839 HRS, 260 white), and Yemen (55,000 white).
  • The nearby MGEX/CBOT spread continued to widen this week due to the global supply concerns for high quality milling wheat. The spread stood at $1.36/bu on Friday, up from $1.13/bu a week ago.
  • The Baltic Panamax Index fell for the sixth consecutive week, losing 19 percent from last week and closing at 1,337 on Friday. Increased tonnage and disruptions in coal shipments from Australia have pressured the market recently.

File Name
PR 110128.pdf
PR 110128.xls
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