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February 4, 2011

(See attached file: PR 110204.pdf)(See attached file: PR 110204.xls)

  • Wheat prices were higher again this week due to growing concerns over potential winterkill losses as extremely cold temperatures hit the Great Plains. Wheat futures reached a 29-month high on Wednesday, with the MGEX March 2011 contract surpassing $10.00/bu for the first time. Prices lost ground, however, towards the end of the week due to profit taking and lower-than-expected export sales. Overall, the CBOT March contract gained 28 cents, closing at $8.53/bu. KCBT nearbys gained 30 cents, to $9.42/bu, while MGEX nearbys gained 27 cents, to $9.88/bu. A weaker dollar and a rally in crude oil pushed both corn and soybean prices higher this week. Corn gained 34 cents this week, closing at $6.78/bu on Friday, and the CBOT March soybean contract gained 35 cents, to $14.33/bu.
  • Statistics Canada released their update for stocks of principal field crops on Friday. The agency reported total Canadian wheat stocks, as of December 31, 2010, were down 10 percent from a year ago, from 22.5 MMT to 20.2 MMT. This is the lowest level since 2007 and five percent below the five-year average. Stats Canada reported durum stocks at 3.7 MMT, a 34 percent decline from last year and 22 percent below the five-year average.
  • Agriculture and Agri-Food Canada (AAFC) released their preliminary 2011/12 planted area projection for Canadian wheat late last week. The government agency forecasted a sharp increase in durum plantings, from 1.3 million hectares to 1.6 million hectares, due to higher prices and lower 2010/11 ending stocks. All wheat planted area is expected to increase by eight percent, from 8.5 million hectares to 9.3 million hectares. AAFC currently projects a seven percent increase in Canada’s 2011/12 all wheat production, from 23.2 MMT to 24.9 MMT.
  • Extremely cold temperatures in the U.S. Plains brought concerns over potential winterkill losses for the HRW wheat crop. Cold temperatures are expected to continue through next week. USDA reported that 37 percent of the Kansas wheat crop, as of January 30, 2011, was rated in either poor or very poor condition, the lowest rating in the past 10 years.
  • Soft red winter basis was up this week due to increased barge rates and logistical problems following this week’s snowstorm. The Gulf SRW FOB basis climbed to $1.00/bu for nearby delivery, up from $0.85/bu last week.
  • U.S. export sales came in below trade expectations this week. According to USDA, export sales for the week ending January 27, 2011 totaled 534,100 MT, which fell below trade estimates of 800,000 to 1,100,000 MT. Increases were reported for Egypt (33,147 HRW, 55,000 SRW, 52,004 white), Mexico (33,808 HRW, 1,000 HRS, 33,500 SRW), Indonesia (-670 HRW, 60,300 HRS), Taiwan (5,010 HRW, 44,808 HRS, 8,180 white), Japan (23,899 HRW, 2,798 HRS, 20,415 white), and the Dominican Republic (15,000 HRW, 10,500 HRS, 18,000 SRW). Net sales of 31,300 MT for delivery in 2011/2012 were for Mexico (26,000 HRS), Honduras (2,161 HRS, 1,589 SRW), and Nicaragua (1,500 HRW).
  • The ICE Dollar Index supported commodity prices early in the week by falling to its lowest point since early November on Tuesday. The index fell to a low of 77.07 before rebounding late in the week. Overall, the index was down slightly from a week ago, from 78.13 to 78.07 on Friday.
  • Ocean freight rates fell once again this week. Maritime Research’s Grain Freight Index fell to its lowest point since August 15, 2009, to 524.2. Destination rates were also lower, with Gulf/Japan down $1/mt from last week, at $49/mt, and PNW/Japan down $2/mt, to $27/mt.

File Name
PR 110204.pdf
PR 110204.xls
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