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August 6, 2010

(See attached file: PR 100806.pdf)(See attached file: PR 100806.xls)

Highlights:
  • Wheat futures closed sharply higher this week following the Russian government’s announcement to ban wheat exports. Prices rose early in the week with ongoing drought concerns in Russia and the EU, and Thursday’s announcement sent prices soaring to a 23-month high. Thursday’s gains were wiped out on Friday, falling by their maximum daily limit of 60 cents/bu due to profit taking. The CBOT July contract closed at $7.25/bu, up 64 cents from a week ago. KCBT nearbys were up 45 cents, closing at $7.20/bu, and MGEX nearbys gained 35 cents, to $7.23/bu. Corn prices also were higher, gaining 12 cents to close at $4.05/bu, while soybeans were up 6 cents, to $10.59/bu.
  • The Russian government announced a ban on grain exports, effective August 15 through December, due to the ongoing drought and severe temperatures that have plagued the country since mid-June. The Russian government said that the ban would apply to all existing contracts, but said on Friday that they would review the ban after harvest. The announcement sent futures prices soaring on Thursday, with the CBOT nearby price gaining the maximum daily limit of 60 cents and closing at $7.85/bu.
  • Informa Economics released their August crop report on Thursday. Informa pegged 2010/11 global wheat production at 652 MMT, down 5.9 MMT from last month. Reductions for the EU and Russia accounted for most of the decline, with Informa reducing the EU production forecast by 3.2 MMT, to 139 MMT, and reducing the Russian outlook by 2.0 MMT, to 49.0 MMT. Informa raised its U.S. wheat production forecast, from 60.3 MMT to 61.0 MMT.
  • The United Nations’ Food and Agriculture Organization reduced its 2010/11 global wheat production forecast on Wednesday. The UN agency placed world production at 651 MMT, 25 MMT less than their previous estimate made in June. The current projection is equal to the International Grains Council’s estimate and 10 MMT less than USDA’s current projection.
  • The latest report from the Buenos Aires Grain Exchange placed Argentina’s wheat plantings at 89 percent complete, with 3.7 million hectares planted. The exchange maintained their planted area estimate at 4.2 million hectares, but stated that the recent run-up in wheat prices could trigger more plantings. USDA’s Buenos Aires office increased their 2010/11 production outlook for Argentina by 1.5 MMT, to 13.5 MMT.
  • Export sales were strong again this week, with USDA reporting commercial exports at 854,600 MT. Increases were reported for Japan (35,641 HRW, 91,331 HRS, 33,807 white), unknown destinations (62,000 HRW, -39,688 HRS, 5,000 SRW, 95,975 white, -6,500 durum), Egypt (110,000 HRW), the Philippines (73,732 HRS, 20,068 white), South Korea (5,500 HRW, 11,750 HRS, 55,000 SRW, 9,680 white), Brazil (56,584 HRW), and South Africa (40,000 HRW).
  • The Baltic Panamax Index was down slightly from last week, dropping 51 points to close at 2,581. Maritime Research’s Grain Freight Index was slightly higher, standing at 530.0 on Friday compared to 525.8 a week ago.

File Name
PR 100806.pdf
PR 100806.xls
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