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January 29, 2016
Uncertainty about Russian export policies and short-covering helped CBOT wheat reach a one-month high mid-week. Beneficial rains forecast for the U.S. winter wheat growing areas added pressure and the strength of the U.S. dollar limited gains. Wheat futures ended the week mixed. CBOT March wheat added 4 cents to $4.85/bu, KCBT rose a penny to $4.82/bu and MGEX finished the week flat at $5.00/bu. CBOT March corn grew 2 cents to $3.77/bu and CBOT March soybeans climbed 6 cents on the week to $8.82/bu.

Excluding nearby contracts, basis is flat for both the Gulf and Pacific Northwest (PNW) due to sluggish export demand and farmer selling. Gulf basis for nearby contracts firmed as high water, fog and daylight navigation continue to delay barge freight which also increases demand for rail freight in the short term. The Great Lakes are now closed, and typically reopen in late March. Rain delayed ship loading at many PNW ports in January, causing basis to firm for nearby contracts.

In its weekly Export Sales Report, USDA reported net sales of 294,200 metric tons (MT) for delivery in marketing year 2015/16. Sales, which were in line with trade expectations of 250,000 to 400,000 MT, were down 19% from last week but 9% higher than the prior 4-week average. Total known outstanding sales and accumulated exports of all wheat classes for marketing year 2015/16, through Jan. 21, 2016 were 16.7 million metric tons (MMT), 16% lower than last year's year-to-date total of 19.9 MMT.

Russia will decide whether or not to change the current export tax on Feb. 3 according to Reuters.

Egyptian officials continue to debate about what the government's allowable ergot level for imported wheat should be. GASC included the previous specification of 0.5% ergot in last week’s tender, but the agricultural ministry again stated there must be a zero tolerance for ergot in imported wheat.

The European Commission forecast European Union (EU) soft wheat exports will reach 29.1 MMT, down 13% from 2014/15. EU wheat feeding will increase 4% year-over-year to an estimated 54.5 MMT.

The Baltic Panamax Index continued its downward slide finding new lows four out of five days this week. The Index closed at 317, down 10% on the week.

The Dollar Index rose to a 3-week high of 99.61 this week, up slightly from 99.53 last Friday.

Current hard red spring (HRS) price indications are for Northern Spring. Dark Northern Spring is available, but premiums vary. Soft red winter (SRW) indications are for a minimum falling number of 250. Higher minimum specifications will carry a premium.

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