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July 23, 2010

(See attached file: PR 100723.pdf)(See attached file: PR 100723.xls)

Highlights:
  • Adverse weather continues to be the driving factor in wheat prices. Futures fell early in the week because of profit taking following last week’s rally, but continued concerns over EU and Black Sea production pushed prices higher once again. CBOT nearbys reached their highest level since June 2009 on Thursday and gained 9 cents on the week, to $5.96/bu. KCBT nearbys were up 16 cents, to $6.15/bu, while MGEX nearbys closed at $6.28/bu, a 17-cent gain from a week ago. Corn prices fell this week due to favorable weather and steady crop conditions. CBOT corn was down 23 cents, closing at $3.71/bu. Soybeans lost 2 cents on the week, closing at $10.17/bu.
  • Drought conditions continue to plague the Black Sea region. The Government of Kazakhstan reduced their total grain production estimate this week by 1.0 MMT, placing 2010/11 production between 13.5-14.5 MMT. Wheat accounts for over 75 percent of total Kazakh grain production. Ukrainian based grains analyst UkrAgroConsult currently pegs the 2010/11 Kazakh wheat crop at 12.4 MMT, a 23 percent decline from last year.
  • The Ukrainian Government expects a 26 percent decline in total grain exports this year, from 21.5 MMT last year to 16.0 MMT in 2010/11. Last year, wheat accounted for approximately 43 percent of total Ukrainian grain exports. The Ukrainian Agriculture Ministry expects their 2010/11 wheat crop to reach 18.0 MMT, 14 percent less than last year and 2.0 MMT less than USDA’s current estimate of 20.0 MMT.
  • Harvest is underway in Germany and there are concerns the hot temperatures will significantly reduce yields in this year’s wheat crop. The German Farming Association (DBV) stated on Thursday that it expects yields to fall by 10 to 20 percent from last year’s 7.82 mt/ha and pegged the 2010/11 crop at 23.8 MMT, 6 percent less than 2009/10.
  • Rains have slowed planting progress in Argentina, according to the Buenos Aires Grain Exchange. The Exchange stated in its weekly crop report that planting was 79 percent complete, compared to 99 percent complete this time last year. The Exchange’s total planted area estimate for Argentina currently stands at 4.2 million hectares. The Argentine Agriculture Ministry trimmed their planted area projection this week, from 4.4 million hectares to 4.25 million hectares.
  • HRS Gulf basis levels continued weakening this week, falling an additional 20 cents per bushel, to $1.15/bu, for 13.5 percent protein levels. The lower basis has kept Gulf FOB HRS 13.5 values steady ($274/mt last week vs. $273/mt this week) despite the run-up in futures prices.
  • The CBOT SRW/corn spread continues to widen following the gains in wheat and losses in corn prices this week. The spread reached $2.25/bu on Friday, up from $1.93/bu a week ago.
  • The Baltic Panamax Index gained 13 percent on the week, reaching 2,362 on Friday. Destination rates to Japan were up slightly, with Gulf/Japan at $58/mt and PNW/Japan at $33/mt.

File Name
PR 100723.pdf
PR 100723.xls
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