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September 7, 2007
(See attached file: PR070907.pdf)(See attached file: PR070907.xls)

  • This was another incredible week for futures as continued blistering import demand pushed every contract to limit up gains following the U.S. holiday. An Egyptian tender on a limit up close brought another locked trading session Wednesday, indicating that demand is not being limited at current price levels. Profit taking and a hint of precipitation in Australia inspired a short breather on Thursday that was erased by the end of the session today. Since last Friday, CBOT December futures are up 68 cents/bu ($1.94 since August 3), the KCBT was up 76 cents/bu and the MGE rose 63 cents/bu. Corn futures were up 8 cents/bu this week.
  • At 718,600 MT, in any other year this week's export sales report would be respectable. But after exceeding 1 MMT for 6 of the past 9 weeks, this week's sales appears humble. Traders expect next week's report to be much stronger on reported sales to Egypt, Iraq, Morocco and Algeria. Demand remains extremely strong, especially for HRW and HRS. Demand for SRW fell significantly this week as the premium at the CBOT has shifted demand to other classes.
  • Durum prices moved up about $1/bushel this week as importers continue to rely on U.S. supplies while Canada remains cautious in pricing until the harvest quality becomes clearer. While harsh heat this summer took some bushels off the crop in the northwest corner of North Dakota, it scorched the crop in Saskatchewan slashing yields and perhaps the quality. Lakes origin exports range from $10.34 to $10.89/bu ($380 to $400/MT).
  • The corn/SRW price spread at the CBOT, already at a record level, continues to widen. September delivery SRW is at a $5.12 premium to corn, up nearly 10 times from 53 cents/bu just 6 months ago. The HRW FOB premium to SRW widened to 28 cents/bu ($17/MT) from 11 cents last week.
  • Midwest Barge rates remain very strong with the long range Minneapolis - NOLA route, now trading at a discount to the shorter routes on the southern Mississippi and Ohio Rivers. The record corn crop is supportive and expected to increase rates further as the harvest moves north.
  • Ocean freight made an historic leap this week, adding $17/MT to routes in the Pacific ocean. The Atlantic moved up $5/MT.
  • Near term price direction will be guided by precipitation in the Southern Hemisphere, signals that demand is being limited by prices, and any surprises in next Wednesday's USDA World Agricultural Supply and Demand Estimates release. Prices in European markets will also factor.

USW Commercial Sales Report:

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