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December 28, 2007

(See attached file: PR 071228.pdf)(See attached file: PR 071228.xlsx)
  • Wheat futures fell off again this week as interest from world buyers was lacking and weather continues to benefit the HRW region. Prices found no support from Russia announcing a prohibitive export tax or the extension of the Argentine export license moratorium. Nor did wheat gain support from other commodities. Corn/wheat spreading was reported, as was position covering on speculation that the funds will rebalance commodity portfolios in January. For the week SRW nearbys at the CBOT fell 64 cents/bu, the KCBOT fell by 55 cents and the MGE finished down 48. Corn gained 9 cents/bu this week and beans were up 30 cents, squaring off for the upcoming spring acreage battle.
  • The week started out on a bearish note as both Egypt and India canceled tenders citing high prices over the weekend after Korea tendered and passed last week. Export sales were just below trade expectations at 299,000 MT but were nearly two and a half times greater than the 123,000 MT weekly average needed to meet the USDA export forecast. Recent tenders cover Japanese needs into April while traders expect increased near term interest from Southeast Asia among others.
  • With new sales originated from the Gulf slowing, basis prices are generally unchanged from last week. On the other hand, demand in the PNW has remained strong, causing basis prices to rise as futures fall, keeping cash prices steady. SW prices were unchanged on the week at $13.45/bu ($494/MT). Traders are not optimistic that prices will fall substantially for new crop SW.
  • The Prime Minister of Russia reportedly has signed a resolution raising its wheat export tariff from 10% to 40% of value, but no less than 105 euro/MT ($153). The tariff will be in force until April 30, 2008. The Ukrainian government announced that it may double its grain export quota for the current marketing year to 2.4 MMT (USDA forecasts exports at 1.5 MMT). The timing of the export opening remains uncertain.
  • Although the Argentine Agriculture Secretary left its production estimate unchanged at 15.4 MMT (USDA forecasts the Argentine harvest at 15.0 MMT), the government extended the closure of its wheat export registry to ensure domestic supplies.
  • New crop HRS prices rebounded on old crop this week with September '08 delivery HRS (MU08) is at a $1.89/bu discount to nearbys, down 34 cents/bu from last week but up from 99 cents/bu in November. The MU08 premium over December '08 corn fell 25 cents this week to $3.68/bu, up from $1.54/bu early this summer. The November '08 soybean premium over MU08 contracts jumped 40 cents/bu this week to $2.79/bu. The SW premium to SRW opened another $14/MT this week to $4.10/bu ($151/MT), up from $1.47/bu last month.
  • The dollar fell back after reaching a two month high against the euro last week. The Canadian dollar is again trading above the U.S. dollar.

File Name
PR 071228.pdf
PR 071228.xlsx
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