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May 11, 2012

(See attached file: PR 120511.pdf) (See attached file: PR 120511.xls)

  • Futures markets closed mixed this week. KCBT and CBOT found support from technical selling early in the week and from the USDA WASDE report on Thursday. A strengthening dollar caused futures to fall on Wednesday and limited gains the rest of the week. Prospects of a large spring wheat crop and early emergence have pressured the MGEX contract for several weeks. Weakness in CBOT soybeans and outside financial markets spilled over into wheat markets on Friday. MGEX went against the greater losing trend on Friday and was the only wheat contract to post a gain on the week, closing 1 cent higher at $7.41/bu. KCBT lost 13 cents on the week to close at $6.01/bu and CBOT finished 11 cents lower at $5.93/bu. CBOT corn closed down 54 cents at $6.08/bu and CBOT soybeans lost 71 cents to close at $14.04/bu.
  • On Thursday, USDA released its first supply and demand estimates for the 2012/13 marketing year. It showed global supplies 2 percent lower than 2011/12 and global consumption decreasing 1 percent. The report gave support to wheat markets thanks to a lower-than-expected ending stocks estimate. USDA projects 2012/13 world ending stocks at 188 MMT, down 8.9 MMT from the previous year. USDA estimates higher production in the U.S. than in 2011/12 and stronger domestic and export demand.
  • In its weekly crop conditions report on Monday, USDA rated the U.S. winter wheat crop at 63 percent good to excellent, down from 64 percent last week and up from 33 percent last year at this time. It rated 12 percent of the crop as poor to very poor, compared with 42 percent last year. USDA showed spring wheat planting as 84 percent complete, compared with the 5-year average of 49 percent. It pegged crop emergence at 47 percent, up from 30 percent last week and just 5 percent this week last year. The positive crop conditions continue to weigh on markets. MGEX prices fell to their lowest level since November 2010 due to the fast planting pace and quick emergence of the crop in the northern Plains. KCBT is near 2-year low.
  • The Buenos Aires Grain Exchange said it expects Argentina’s 2012/13 planted wheat area to decline to 9.9 million acres, down from 11.3 million acres in 2011/12. If realized, it would be the second smallest wheat area in 12 years. The Exchange cited low market prices and export difficulties as the main reason for the decline.
  • The Baltic Panamax index closed lower for the second week in a row at 1,322, down from 1,527 last week. Lower demand in South America and an oversupply of vessels are to blame for the decrease.
  • The ICE Dollar Index closed higher this week at 80.40, up from 79.59 last Friday. The stronger dollar pressured wheat markets on Wednesday and limited gains earlier in the week.

File Name
PR 120511.pdf
PR 120511.xls
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