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July 2, 2010

(See attached file: PR 100702.pdf)(See attached file: PR 100702.xls)

Highlights:
  • Harvest pressure sent wheat prices downward early in the week, but spillover from the rally in corn prices following the release of USDA’s June 30 acreage report sent wheat futures higher by week’s end. The CBOT July contract posted a 22-cent gain on Wednesday, followed by a 20-cent gain on Thursday. Overall, the CBOT July contract was up 31 cents on the week, closing at $4.87/bu on Friday. KCBT nearbys were up 23 cents, to $5.07/bu, while MGEX nearbys were up 10 cents, to $5.22/bu. CBOT corn nearbys hit a contract low on Tuesday, but ended the week strong following the lower-than-expected stocks and acreage estimates by USDA. The CBOT July corn contract was up 23 cents from last week, to $3.64/bu. Soy nearbys were also up, by 5 cents, to $9.62/bu.
  • USDA’s June 30 acreage report sent commodity prices surging, with CBOT corn prices gaining 29 cents on Wednesday. USDA estimated corn planted acres at 87.9 million acres, down from their March estimate of 88.8 million acres. Although the report was mostly bearish for wheat, spillover from the corn rally sent CBOT wheat prices higher. USDA increased their wheat planted acres by 500 thousand acres from their March projection, to 54.3 million acres. Durum planted acres accounted for nearly all of the increased acreage.
  • USDA released their Grain Stocks report, estimating all wheat stocks up 48 percent from a year ago, at 973 million bushels (26.5 MMT). Indicated disappearance between March 1 and June 1, 2010 was 383 million bushels (10.4 MMT), the same as a year ago.
  • Informa Economics released their July crop forecasts on Friday. Informa pegged 2010/11 U.S. winter wheat production at 1.5 billion bushels (41.5 MMT), slightly up from their June estimate. Informa projected spring wheat production at 597 million bushels (16.2 MMT) and durum production at 94 million bushels (2.6 MMT).
  • Hot and dry weather has caused some analysts to reduce their 2010/11 Russian wheat production forecast. The Institute for Agricultural Market Studies, a Russian grain analyst, now projects Russian wheat production at 57 MMT, a two percent decline from their previous estimate of 58 MMT. Hot temperatures in France and Germany have also caused concerns with the European crop.
  • The CME Group announced Monday that it will increase storage rates for the CBOT wheat futures contract as part of its Variable Storage Rate plan to facilitate convergence between cash and futures prices. CME will increase storage rates starting July 18 by approximately 3 cents per bushel, bringing storage costs to 8 cents per bushel.
  • It was a volatile week for the dollar, making sharp gains early in the week only to come back down late in the week. The Dollar Ice Index stood at 84.32 on Friday, a one percent decline from last week and its lowest point since mid-May.
  • Freight rates continue to receive pressure from slowing demand for iron ore and coal, along with diminishing grain exports from South America. The Baltic Panamax Index was at 2,447 on Friday, down from 3,045 last week and its lowest point since October 2009. Destination rates were also lower, with Gulf/Japan at $56/mt and PNW/Japan at $30/mt.

File Name
PR 100702.pdf
PR 100702.xls
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