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November 21, 2008

(See attached file: PR081121.pdf) (See attached file: PR081121.xlsx)

  • Better than expected U.S. exports and crop problems in Australia and Argentina were not enough to keep futures out of the red this week. Wheat futures traded sideways early in the week before declining sharply Thursday and Friday amid spillover pressure from the corn market and a rally in the dollar. The CBOT nearby contract closed 55 cents/bu lower at $4.99/bu, KCBT closed 60 cents/bu lower, while the MGE closed at its lowest level in 16 months at $5.87. Soybeans ended the week 56 cents/bu lower and corn closed down 42 cents/bu at $3.39/bu.
  • The U.S. winter wheat crop is 96 percent planted, advancing 2 points from the previous week and on-track with the 5-year average for this time of year. The crop is 88 percent emerged, up four points from last year and on par with the 5-year average. Other than Illinois, where plantings are 17 percent ahead of the average, producers were seeding winter wheat within 5 points of the 5-year average. The condition of the winter wheat crop was lowered 2 points this week to 66 percent good to excellent but is still 21 points better than this time last year.
  • USDA reported net export sales of old crop wheat at 511 TMT, which was above market expectations of 400-500 TMT, and was 40 percent above the previous 4-week average. The largest increases in net export sales were to Japan (103 TMT), South Korea (89 TMT), and Egypt (57 TMT). Cumulative year-to-date sales stand at 20 MMT or 73 percent of the USDA projected total of 27.2 MMT.
  • Wet weather in Queensland and New South Whales is expected to delay Australia’s 2008/09 wheat harvest by more than two weeks. Rains are expected to continue next week and possibly longer increasing the risk of reduced quality and yields. Meanwhile, persistent dryness in Argentina’s wheat growing region resulted in the Buenos Aires Grain Exchange (BAGE) lowering its production estimate 500 TMT to 10.0 MMT. BAGE noted that frost last weekend likely damaged maturing plants in Buenos Aires, which accounts for half of total production.
  • The ICE dollar index gained for the third consecutive week as investors exited risky assets for the safety of U.S. government debt. The index closed at 87.96, up 2 percent on the week and 21 percent since early July.

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