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January 21, 2011

(See attached file: PR 110121.pdf)(See attached file: PR 110121.xls)

Highlights:
  • Wheat futures climbed higher this week on strong export demand, especially from North Africa, and strong U.S. export sales, which reached a five-month high last week. The CBOT March contract gained 21 cents on Friday following the release of USDA’s export sales report, reaching its highest point since early August. The contract closed at $8.24/bu, up 51 cents from a week ago. KCBT nearbys gained 40 cents, to $9.00/bu, and MGEX nearbys closed at $9.37/bu, up 47 cents from last week. Chicago corn prices were up this week after the Buenos Aires Grain Exchange reduced its 2010/11 Argentine corn production forecast as dry weather has reduced yields. CBOT corn closed at $6.57/bu, up 8 cents from last week. Argentina did receive rainfall this week, however, which was beneficial for their soy crop. CBOT soybean nearbys lost 10 cents this week, to $14.25/bu.
  • The International Grains Council (IGC) increased their 2010/11 global wheat production forecast this week. The IGC now projects world production to reach 647 MMT, a 3.0 MMT increase from their previous projection due to increased estimates for Australia (25.0 MMT) and Argentina (14.0 MMT). The IGC also increased its 2010/11 U.S. wheat export forecast by 2.0 MMT, to 36.0 MMT, while reducing Australia’s export outlook by 1.0 MMT, to 15.0 MMT. IGC currently projects 2011/12 global wheat output to increase by four percent, to 670 MMT.
  • French analyst Strategie Grains reduced its 2010/11 EU soft wheat export forecast this week, stating that tight supplies have led to higher EU prices compared to other origins. The analyst currently projects the EU’s 2010/11 soft wheat exports at 19.1 MMT, down 0.6 MMT from their previous projection. Strategie Grains also slightly reduced the EU’s 2011/12 soft wheat production outlook by 0.9 MMT, to 135.6 MMT. If realized, this would be a six percent increase from 2010/11 production.
  • Informa Economics released their updated 2011 wheat acreage forecast on Friday. Informa projected winter wheat plantings at 41.0 million acres, equal to USDA’s projection. The firm pegged all U.S. wheat acres at 57.6 million acres, up from their previous forecast of 56.1 million acres.
  • A strong export sales report boosted wheat futures on Friday. The USDA reported that export sales for the week ending January 13 reached 1,054,300 MT, which exceeded trade estimates of 300,000 to 700,000 MT. Increases were reported for unknown destinations (25,150 HRW, 117,950 HRS, 10,000 SRW, 27,200 white, -2,500 durum), Turkey (172,849 HRW), Japan (35,945 HRW, 66,372 HRS, 38,472 white, 270 durum), Nigeria (104,750 HRW, 5 HRS, 3,960 SRW), Vietnam (1,007 HRW, 47,172 HRS, 10,817 white), and Saudi Arabia (52,250 HRW).
  • A weaker dollar was supportive to prices this week. The ICE Dollar Index fell to its lowest point since mid-November on Friday, falling to 78.14. This is down from 79.16 a week ago.
  • The Baltic Panamax Index continued its downward slide this week. The index closed at 1,650 on Friday, down from 1,923 a week ago. Gulf/Japan route was also down this week, losing $2 to $51/mt.

File Name
PR 110121.pdf
PR 110121.xls
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