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July 11, 2008

(See attached file: PR 080711.pdf)(See attached file: PR 080711.xlsx)

Highlights
  • Wheat futures fell through the week on a general commodity sell-off and harvest pressure before rebounding today despite a bearish USDA report with a surge in crude oil cited for the strong finish. Bullish input included a decline in HRS conditions and a hot/dry forecast for the Northern Plains leading to yield concerns, rains causing at least minor delays for the winter wheat harvest and surprisingly strong import demand. On the other hand, the potential for global production, already at record highs, continues to grow. For the week, September delivery positions at the CBOT fell 57 cents/bu, the KCBOT was off 48 cents/bu and the MGE fell 42 cents/bu. Corn July delivery prices were down a steep 66 cents/bu while soybeans declined 34 cents/bu.
  • Export sales remain remarkably strong as continued HRW demand combined with higher than expected SRW sales to keep the weekly sales total above 600,000 MT again this week. This year's sales pace is currently 29% above last year. Egyptian privates continue to book SRW despite the availability of aggressively priced Black Sea supplies. South American demand is also strong with Chile and Colombia accounting for more than half of this week's SRW sales. Nigeria took a 100,000 MT of HRW while South Africa and Brazil combined for 73,000 MT, with indications still lacking that Brazil is cancelling U.S. sales with the Argentine market open again. HRS demand remains focused in Asia with Japan's pace, of HRS and all classes, nearly twice as fast as last year and the Philippines also buying earlier than last year. SW sales are struggling as Yemen booked cheaper HRW and South Asian swing buyers wait to put on coverage.
  • Global production estimates continue to climb on reports from the 3 largest wheat producers. The major Chinese agriculture consultancy increased its forecast for the country by 5 MMT to the second highest level in history, the government of India increased its estimate of this year's record harvest by nearly 2 MMT to 78 MMT and the French crops agency put the EU-27 wheat crop up 15%, 23 MMT over last year, also setting a new record.
  • Record SRW stocks and use forecast in today's World Agricultural Supply and Demand Estimates. Pegging the current SRW crop at 70% (6.8 MMT) over last year, USDA forecasts SRW ending stocks at a record 3.8 MMT, despite consuming a record 10.6 MMT, ostensibly on higher feed use.
  • SW prices continue to fell on a pessimistic demand outlook for new crop supplies.
  • Ocean freight rates strengthened as the weekly price see-saw continues with South American shipments being cited for a surge in demand. Rate indications in the Atlantic are up $5/MT and the Pacific is off $7/MT.

File Name
PR 080711.pdf
PR 080711.xlsx
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