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July 9, 2010

(See attached file: PR 100709.pdf)(See attached file: PR 100709.xls)

  • Wheat futures climbed sharply higher this week, posting gains for six consecutive days going back to Wednesday of last week. Production concerns across Europe, the Black Sea region, and Canada due to adverse weather conditions sparked a 22-cent rally on Wednesday, followed by an 18-cent rally on Thursday in the CBOT July contract. The USDA WASDE report cooled the markets off on Friday, however, with a bearish U.S. production and ending stocks forecast. Overall, the CBOT July contract gained 35 cents on the week, closing at $5.23/bu. KCBT nearbys were up 41 cents, to $5.48/bu and MGEX nearbys gained 32 cents, to $5.54/bu. The CBOT July soybean contract gained 62 cents this week, closing at $10.25/bu, after crop conditions fell for a fourth consecutive week, with added support coming from strong Chinese demand. CBOT July corn gained 11 cents, closing at $3.75/bu.
  • USDA reduced their 2010/11 global wheat production forecast by 7.5 MMT, to 661 MMT, in their July World Agriculture Supply and Demand Estimates. The reduction was primarily due to lower projections for Canada, Russia, and Kazakhstan. USDA lowered the Canadian outlook by 4.0 MMT, to 20.5 MMT, because of heavy rainfall in June. USDA’s Russian and Kazakh production forecast were reduced by 4.5 MMT (53.0 MMT) and 3.0 MMT (14.0 MMT), respectively, because of drought conditions. USDA pegged the 2010/11 U.S. crop at 60.3 MMT, the same as last year and 4.0 MMT greater than their previous estimate due to better yields.
  • Russian grain analyst SovEcon reduced their 2010/11 Russian wheat production forecast sharply due to severe drought. The analyst estimates this year’s Russian wheat crop will fall between 49 and 51 MMT, down from their May estimate of 55.5 MMT. USDA’s latest Russian production estimate, released on Friday, stands at 53.0 MMT.
  • Agriculture and Agri-Food Canada reduced its 2010/11 Canadian wheat production forecast. The government agency pegged Canadian production at 20.9 MMT, down from its previous projection of 24.2 MMT.
  • The hot weather in France, Germany, and the United Kingdom sent milling wheat futures in Paris to a 13-month high on Thursday, climbing to 164.50 euro/mt ($208/mt). The Matif November contract closed at 160.00 euro/mt ($203/mt) on Friday.
  • Freight rates continued sliding this week, with the Baltic Panamax Index hitting its lowest point since May 2009. The index closed at 1,944 on Friday, a decline of 58 percent since May 21 and a 21 percent drop from a week ago. Destination routes fell lower as well, with Gulf/Japan at $51/mt and PNW/Japan at $27/mt.

File Name
PR 100709.pdf
PR 100709.xls
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