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November 30, 2007

(See attached file: PR 071130.pdf)(See attached file: PR 071130.xlsx)

  • In the two weeks since the last USW Price Report, U.S. futures prices ended seven weeks of steady decline, finding support from dry conditions in the U.S. Southern Plains, a freeze in Argentina and continued strong import demand. Between Sep. 28 to Nov. 16, SRW nearby futures were down 20% ($1.90/bu), HRW down 17% ($1.55) and HRS fell 9% (80 cents). With all offers now basis March delivery, nearby futures prices at the CBOT are up $1.15/bu, the KCBT rose $1.17/bu while corn futures rose 5 cents/bu from November 16. HRS hit an historic high of $9.75/bu today and closed $1.27/bu higher than two weeks ago as supplies tighten and the market needs to "buy" acres in the spring.
  • The Argentine government stopped issuing export licenses this week until it can assess the yield damage from the freeze earlier this month. Production decline estimates vary widely. In a press release this afternoon the Argentine Agriculture Secretariat estimated 2007/08 production at 15.4 MMT compared to 15.5 MMT forecast by USDA. Argentina has already issued export licenses for 7 MMT, all of which must be shipped by March. Markets have been supported on the fear that Argentina might not reopen its export registry. USDA forecasts Argentina to export 10.5 MMT this year.
  • The production outlook is beginning to diverge widely between the U.S. red winter wheat classes. According to the NASS Crop Progress Report, the SRW crop is in good condition with higher than average emergence on reportedly much higher planted acreage. Weather in the Southern Plains on the other hand, has not been favorable for the HRW crop. In Oklahoma and Texas only 34% and 11% of the crop is rated in good to excellent condition. Emergence is 12% and 15% below average. This weekend, a cold front is forecast to move through the Southern Plains bringing moisture, but pushing the HRW crop into dormancy.
  • U.S. export sales were reported at 407,500 MT, within trade estimates but well over the 125,000 MT weekly level needed to meet the USDA export forecast. With 81,500 MT of durum sold this week for next year, total commitments for the 2008/09 crop stand at 890,000 MT compared to 78,000 MT by this point last year. Pakistan made the largest purchase of the week, taking 100,000 MT of SW.
  • Durum prices strengthened considerably this week as supplies continue to tighten in the country. The price range is up $60/MT with Duluth origin ranging from $18.64 to $18.92/bu ($685 to $695/MT).
  • The SW premium to SRW cash prices widened to $2.05/bu ($75/MT). The SRW/corn spread also opened up this week with March SRW now at a $4.84 premium to corn. In the current price rebound, new crop futures have lost ground to nearbys. December delivery SRW is at a $1.05/bu premium over July, up from 81 cents earlier this month but down from $2.58/bu in September.
  • Ocean freight rates had weakened considerably into the beginning of this week, down $10/MT in both the Pacific and Atlantic from two weeks ago, but jumped back up with rates in the Atlantic regaining $5/MT this week. With about two weeks left until the Lakes program closes for the winter, rates are down $15/MT from the last report. Container freight rates are quickly approaching bulk rates as shippers switch to the transport mode, absorbing the excess capacity. The weaker dollar has also slowed container imports, further decreasing availability. Container shippers have passed two rounds of general rate increases and another one is scheduled for January.
  • Although the dollar continues to flounder against the euro at just under $1.48, it has rebounded strongly against the Canadian dollar, nearing parity.

USW Commercial Sales Report:

NASS Crop Progress Report:

Duluth Freight Fixture Schedule:

U.S. Wheat Associates is the industry's market development organization working in 90 countries on behalf of America's wheat producers. The activities of U.S. Wheat Associates are made possible by producer checkoff dollars managed by 18 state wheat commissions and through cost-share funding provided by USDA's Foreign Agricultural Service.

File Name
PR 071130.pdf
PR 071130.xlsx
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