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January 20, 2012

(See attached file: PR 120120.pdf) (See attached file: PR 120120.xls)

  • U.S. futures markets were closed on Monday due to the federal holiday. On Tuesday, forecasts for additional precipitation in Argentina pressured corn and soybean prices, which in turn pulled wheat prices lower. Strong outside markets, a weaker U.S. dollar and improved export sales figures supported prices later in the week and minimized losses. CBOT’s nearby contract was the only wheat contract to close higher this week, up 8 cents to $6.11/bu. KCBT lost 3 cents on the week to close at $6.67/bu and MGEX settled at $7.99/bu, down 2 cents. The nearby CBOT corn contract gained 12 cents to close at $6.12/bu and CBOT soybeans gained 29 cents to close at $11.87/bu.
  • In monthly reports released this week, French analyst Strategie Grains and Canada’s farm ministry both increased projected global ending stocks for 2011/12 to 211 MMT, which would break a record set in 1999/2000 of 210.7 MMT, according to USDA records. USDA’s current world ending stock estimate is 210.0 MMT.
  • U.S. commercial sales rose significantly this week and well exceeded trade estimates of 350,000 to 450,000 MT. Net sales of 587,200 MT were up 61 percent from the previous week and 81 percent from the prior 4-week average. Total sales through January 12 are 20.5 MMT and on pace to meet USDA’s export forecast of 25.9 for the 2011/12 marketing year.
  • In its monthly report released on Thursday, the International Grains Council (IGC) raised its forecast for 2011/12 global wheat production to a record 690 MMT, up 7.0 MMT from its previous forecast. The increase is due to sizable upward revisions for Australia, Argentina, China, and Kazakhstan. IGC projects world wheat ending stocks at 204.0 MMT, slightly below the record of 206.0 MMT set in 1999/00. IGC estimates world wheat area in 2012/13 will expand by 1.7 percent to 555.8 million acres, the largest acreage since 1998/99. IGC projects most of the increase will be in the Black Sea region and North America.
  • The Minneapolis Grain Exchange (MGEX) announced this week that it is adding more quality rules to its HRS wheat futures contract. Additions include discounts for vomitoxin levels over 2.0 ppm and levels greater than 3.0 ppm will be undeliverable. Storage rates will increase from 5.0 cents per bushel per month to 7.0 cents. The changes will take effect in the May 2013 contract. In addition, MGEX has received approval from the Commodity Futures Trading Commission (CFTC) to allow the delivery of non-US wheat against its wheat futures contracts. The change will take effect with the September 2012 contract.
  • The Baltic Panamax index is at a 20-month low, closing lower for the fourth week in a row due to lack of freight demand and an oversupply of vessels. The index closed at 1,020 on Friday, down from 1,264 last week. The index has lost 43 percent in four weeks causing estimated freight rates to decline rapidly. Maritime Research’s Grain Freight Index fell for the fifth week in a row from 559.1 to 537.9.
  • The ICE Dollar Index closed lower this week at 80.41, down from 81.79 last Friday.

File Name
PR 120120.pdf
PR 120120.xls
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