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February 3, 2012


(See attached file: PR 120203.pdf) (See attached file: PR 120203.xls)

Highlights:
  • Wheat futures closed higher this week thanks to speculation regarding potential export restrictions in Russia, which prompted early week gains. An announcement by the Russian government to forego export restrictions combined with improved weather forecasts in wheat producing areas pressured prices on Thursday and Friday. The price of soft white wheat out of the Pacific Northwest has increased substantially the last two weeks due to much stronger export demand. CBOT March contract gained 14 cents on the week to close at $6.61/bu. KCBT gained 13 cents to close at $7.12/bu and MGEX closed at $8.39/bu, a 12 cent gain on the week. CBOT nearby corn contract gained 3 cents to close at $6.44/bu and CBOT soybeans closed up 14 cents at $12.33/bu.
  • As of February 1, Ukraine’s State Railway Administration banned grain rail cars from leaving the country in an effort to secure domestic shipments. Ukraine harvested a record 56.7 MMT of grain in 2011/12, including 22.0 MMT of wheat. USDA estimates Ukraine wheat exports at 7.0 MMT, up from 4.3 MMT last year. The ban will mainly affect European customers who receive a majority of Ukrainian wheat imports by land, marine exports were not restricted.
  • Russia’s first deputy prime minister in charge of agriculture announced on Friday that the Russian government sees no need for grain export restrictions in April. He said that upward revised production estimates revealed domestic stocks can support exports of 27.0 MMT. President Vladimir Putin said in October that grain shipments should not exceed 23.0 to 25.0 MMT. The country is on pace to meet that threshold in late March thanks to an aggressive export program, which caused many to speculate on possible restrictions. U.S. futures gained significantly early in the week due to the speculation.
  • Concern over poor weather conditions in key wheat producing regions supported wheat markets early in the week. Drought conditions in the U.S. state of Iowa and bitter cold temperatures in Europe and the Black Sea region continue to worry producers. However, prices fell slightly on Thursday and Friday on improved weather forecasts in parts of the U.S. and Europe. Warmer temperatures in parts of Europe and heavy snow forecasts in dry western Kansas and Nebraska could help wheat crops and avoid winterkill.
  • The Baltic Panamax index is at a 20-month low due to a lack of freight demand and an oversupply of vessels. The index closed at 693 on Friday, down from 815 last week. The index has dropped 61 percent in six weeks causing estimated freight rates to decline rapidly. Maritime Research’s Grain Freight Index fell for the seventh week in a row from 513.1 to 505.4.
  • The ICE Dollar Index closed virtually unchanged this week at 79.06, up slightly from 79.01 last Friday.

File Name
PR 120203.pdf
PR 120203.xls
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