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July 27, 2007
(See attached file: PR070727.pdf)(See attached file: PR070727.xls)

  • U.S. futures surged again this week responding to continued rises in EU wheat futures as rains continue to fall on ripe wheat in Western Europe, sweltering temperatures in the U.S. and Canadian Spring Wheat regions causing concern and extremely robust export demand evidenced by the largest sales week in over a decade. A respected analyst believes there is a good chance wheat will test its $7.17/bu record this season. For the week, CBOT September futures rose 37 cents/bu to $6.53/bu ($240/MT), the KCBT was up 41 cents/bu and the MGE was up 26 cents/bu. Corn futures rose 3 cents.
  • French wheat futures continue to mark new records, achieving a high of 212 euro/MT ($7.92/bu) yesterday after the International Grains Council reduced its forecast for EU production by nearly 3 MMT. With persistent rains in the west and drought in the east, Europe has suffered a perfect storm of bad conditions this season.
  • Heat in the Northern Plains is expected to affect yields more negatively on later planted fields. For the earlier plantings, the conditions are increasing optimism for a high protein, high quality harvest. The Wheat Quality Council's HRS yield estimate came in at 37.3 bu/acre, just higher than the USDA July estimate. Durum yields were estimated at 29 bu/acre, lower than the USDA forecast of 33. Durum prices remain quite strong, ranging from $8.70 to $8.98/bushel ($320 to $330/MT).
  • Traders have begun offering higher protein HRW this week. The perception of the HRW harvest has turned positive as the combines roll north. Harvest samples are looking good and 12% protein levels are being quoted. Discounts for unspecified (ordinary) protein are not being offered, indicating that low protein supplies are not overly abundant. USDA announced it will perform another producer survey in Kansas and Oklahoma to ascertain actual harvested acreage in those two states, using the results for its August 10 production report.
  • Markets were shocked by this week's Commercial Sales report showing that over 2 MMT were booked a week ago. Traders anticipate next week's report will show similar sales levels, although importer interest is perceived slowing in recent days. Export facilities in the Center Gulf (New Orleans) are reportedly near full capacity through September. Ports in the Texas Gulf, PNW and Lakes are offering for August delivery.
  • Positive production news was reported for Kazakhstan and Australia this week. The Kazakh agriculture ministry raised its production estimate for wheat by 1.6 MMT to 15.2 MMT. The ministry forecasts exports at 8 MMT compared to 9 MMT last year. Australia continues to receive beneficial rains, improving moisture levels and stabilizing harvest prospects.
  • SW cash values dropped under SRW for the first time this year.
  • Ocean freight rates diverged again this week, falling in the Pacific by $3/MT, and rising by $4 in the Atlantic. Barge rates in the Mid-West are creeping back up on strong grain movement. Rates on SRW routes are currently 110 to 181% higher than levels paid in May, though still 10 to 20% lower than a year ago.

-This report is made possible by wheat producer funding managed by 17 state wheat commissions.

Wheat Quality Council:

USW Harvest Report:

USW Commercial Sales Report:

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