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August 12, 2011

(See attached file: PR 110812.pdf)(See attached file: PR 110812.xls)

Highlights:
  • Wheat futures were down early in the week as news of the U.S. debt downgrade and a stronger dollar pressured prices on Monday. Futures rallied, however, following the release of the USDA World Agricultural Supply and Demand Estimates (WASDE). With projected 2011/12 U.S. wheat production falling below trade expectations, the report was mildly bullish for wheat. The report was especially bullish for corn and soybeans, and spillover also supported wheat prices. Overall, the CBOT September contract closed at $7.03/bu, up 24 cents from last week and the KCBT nearby contract gained 16 cents, to $7.96/bu. The MGEX contract gained the most on the week as USDA reported declining crop conditions from the previous week. The MGEX September contract gained 34 cents, to $8.61/bu. With USDA reducing both its 2011/12 U.S. corn yield and production estimates, corn prices gained 9 cents from last week to $7.02/bu. A reduced soybean yield and production outlook also supported soybean prices, which were up 6 cents to $13.37/bu.
  • In its August WASDE report, USDA increased its 2011/12 global wheat production forecast by 9.7 MMT from last month to 672 MMT. The increase was largely due to Russian and Ukrainian production forecasts which each increased by 3.0 MMT, to 56.0 MMT and 21.0 MMT, respectively. U.S. production estimates fell by 0.8 MMT to 56.5 MMT due to a lower outlook for durum and spring wheat. The US production estimate was bullish for wheat as it came in below trade expectations of 56.6 MMT.
  • USDA’s weekly U.S. crop progress report showed a decline in the 2011/12 spring wheat condition this week. The percentage reported as “good to excellent” dropped 4% from the previous week to 66%. This is a sharp decrease from 82% reported this time last year. The crop rated “poor to very poor” remained the same this week at 7%, up from 3% a year ago.

  • France’s farm office FranceAgriMer increased its 2011/12 French wheat production outlook this week by 1.2 MMT from last month, to 33.3 MMT, due to improved weather conditions. USDA raised its 2011/12 EU production forecast in this week’s WASDE report, from 132 MMT to 133 MMT.
  • FOB basis prices for HRW out of the Gulf were firmer this week due to strong domestic demand. Basis for 11.5% protein increased $0.10 over last week’s price to $1.00/bu for nearby delivery.
  • FOB basis for HRS 14% protein out of the Gulf was lower again this week, falling from $2.90/bu last week to $2.70/bu on Friday. HRS protein premiums have been weakening due to expectations of higher protein levels in this year’s HRS crop and greater protein levels in this year’s HRW crop.
  • A stronger dollar pressured prices on Monday as the ICE Dollar Index climbed from 74.59 to 74.79. The dollar came back down later in the week and stood at 74.59 on Friday, unchanged from a week ago.
  • The Baltic Panamax Index posted its first weekly gain since the week ending July 8, 2011. The index stood at 1,520 on Friday, up from 1,478 last week. Destination rates were also higher, with the Gulf/Japan route up $1 to $50/MT.

File Name
PR 110812.pdf
PR 110812.xls
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