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October 14, 2011


(See attached file: PR 111014.pdf)(See attached file: PR 111014.xls)

Highlights:
  • Movement in the wheat futures markets this week centered around the release of the USDA’s monthly World Agricultural Supply and Demand Estimates (WASDE) on Wednesday. All three contracts gained early in the week in anticipation of the report but fell sharply Wednesday and Thursday following the release. The report increased the global supply forecast, which pressured prices. Early week gains were enough for CBOT and KCBT to close higher than last week while MGEX closed lower. The CBOT December contract gained 10 cents to close the week at $6.18/bu and KCBT closed at $7.07/bu, up 22 cents this week. MGEX finished the week 27 cents lower at $8.93/bu. The CBOT nearby corn contract gained 40 cents this week to close at $6.40/bu while the January soy contract gained one dollar to end at $12.70/bu.

  • The WASDE projected global wheat supplies (production plus carry-in) up by 5.4 MMT to 877 MMT, three percent greater than last year. World beginning stocks increased 2.3 MMT to 196 MMT, edging closer to last year’s mark of 201 MMT, thanks largely to a 3.2 MMT increase for Australia. Higher production estimates in Kazakhstan, Australia, the European Union, and Canada contribute to the increased world supply. Increased global competition and lower U.S. production caused U.S. export estimates to decline 1.4 MMT to 26.5 MMT, down from 35.1 MMT last year.
  • Traders quoted all HRS prices over the March contract this week due to an inverse between December and March futures. The spread between the MGEX December and March contracts is $0.60, down from $0.80 last week, a decline that accounts for nearly all the change in HRS basis prices quoted in this week's report. Traders continue to quote nearby HRW and SRW prices based on December futures.
  • In its first crop estimate of the year, the Buenos Aires Grains Exchange estimated a 2011/12 wheat crop of 12.6 MMT, down from 15.8 MMT last year. Persistent dry weather is the main cause of decreased production. USDA currently estimates Argentina’s production at 13.5 MMT, down from 15.0 MMT last year.
  • The European Union published a first-ever short-term agricultural outlook this week, indicating that wheat production and ending stocks will be almost unchanged from last year. The report estimated 2011/12 wheat production of 127.4 MMT compared to 127.5 MMT last year. The ending stocks forecast is 10.0 MMT, down slightly from 10.1 MMT last year. EU exports are expected to fall due to Russia’s reentrance into the world market after a self-imposed embargo last year. The report pegs EU exports at 15.0 MMT, down from 20.1 MMT last year.
  • French farm office FranceAgriMer updated its 2011/12 crop estimates this week, increasing wheat production estimates from last month by 400 TMT to 33.8 MMT, a six percent drop from last year. Due to the smaller harvest and rising domestic, the export estimate dropped to 15 MMT from 19.7 MMT last year.
  • The Baltic Panamax index gained this week, bolstered by U.S. wheat exports and coal sales to Asia. The index closed at 2,084 on Friday, up from 1,913 last week.
  • The dollar lost 2.6 percent this week, the largest weekly loss since May 2009. The ICE Dollar Index stood at 76.65 on Friday, down from 78.63 last week.

File Name
PR 111014.pdf
PR 111014.xls
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