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August 26, 2011
(See attached file: PR 082611.pdf)(See attached file: PR 082611.xlsx)
  • Rising concerns that continued drought in the Southern Plains will keep many farmers from planting their HRW wheat crop boosted KCBOT futures this week. KCBOT rose 47 cents to close at $8.66/bu. The rise boosted the other wheat futures contracts with both CBOT and MGEX closing up on the week. CBOT rose 32 cents to close at $7.62/bu. MGEX rose 47 cents to close at $9.56/bu. Hot weather across the Midwest raised concerns that corn and soybean yields will be degraded raising supply concerns. Meteorologists reported parts of Illinois and Iowa experienced their hottest July since 1955. Corn rose 42 cents to an 11 week high to close at $7.53/bu. Soybeans rose 55 cents to a 5 month high to close at $14.15/bu. Markets are becoming more supply oriented with concerns that bad weather will negatively affect crops.
  • Exporters are reporting a drop in protein premiums for HRS to levels not seen in several years. The HRS wheat crop is 30.0 percent harvested and early samples indicate the crop has an above average protein level. High protein levels will allow traders to blend off the low protein HRS they currently have held over from last year. Many buyers lowered their protein specs for HRS so the demand for HRS 14.0 remains limited at this time.
  • The analyst group SovEcon lowered its estimate for Russian wheat production to 55.2 MMT, down 10.5 percent compared to 2009/10. Russia is expected to export up to 18.0 MMT of wheat this year. However, this amount may be capped by Russia's underdeveloped shipping infrastructure and rising Russian wheat prices.
  • Concerns over the supply of high quality high protein wheat in the world is lessening thanks to beneficial rains in Australia's high protein wheat regions, boosted estimates for Western Canada's wheat production, and high reported protein levels in the US HRS crop. However, Germany's harvest continues to be delayed by rain and the US HRS crop is expected to be small.
  • The drought in the southwestern US continues to worsen, with little rainfall and continued high temperatures. The states of Oklahoma and Texas are particularly hard hit. Farmers are becoming concerned that unless precipitation falls soon, many will not be able to plant next years HRW wheat crop.
  • The ICE Dollar Index fell this week amidst growing concern over the US economy. The index stood at 73.71 on Friday, down from 74.00 a week ago.
  • The Baltic Panamax Index continued higher this week thanks to modest iron ore demand and a typhoon hitting China. The index stood at 1,662 on Friday, up from 1,609 a week ago.

File Name
PR 082611.pdf
PR 082611.xlsx
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