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December 12, 2008

(See attached file: PR081212.pdf) (See attached file: PR081212.xlsx)

  • Futures prices firmed this week supported mostly by outside markets. The dollar started the week stronger but suffered sharp losses mid-week to the yen and euro trigging heavy buying in commodities. Crude oil rallied 14 percent this week closing at $46.69/barrel while corn moved 22 percent higher despite an 8.9 MMT increase in carry-out stocks. For the week, nearby wheat futures prices at the CBOT are up 49 cents/bu, the KCBT was 41 cents higher while MGE futures were 43 cents higher. Soybeans ended the week up 71 cents while corn closed 66 cents higher at $3.595/bu.
  • USDA increased its forecast for U.S. ending stocks in this week’s WASDE, bringing year-end stocks 550,000 MT higher to 17.0 MMT. Between classes, imports of SRW were increased 544,000 MT resulting in higher ending stocks and reduced exports. The SW carry-out was increased 272,000 MT due to lower forecast exports.
  • Informa Economics estimates that U.S. winter wheat planted area declined 4.5 percent from last year to 17.8 million hectares. Informa expects soybeans to take acreage from corn and wheat with plantings up 7 percent to 33 million hectares. Corn plantings are expected to decline 3.7 million hectares to 82.2 million hectares.
  • This week’s commercial sales were below trade expectations for 250,000 to 350,000 MT and the second lowest of the marketing year. At 239,300 MT, sales were slightly ahead of the previous week, but down 32 percent from the prior 4-week average. SRW and durum sales lagged other classes, accounting for only 18,000 and 1,600 MT, respectively. Primary destinations for all wheat classes this week were Japan, Colombia, Iran and Thailand. Year-to-date total sales stand at 77 percent of USDA total year forecast of 27 MMT.
  • HRS basis remained strong this week due to lack of farmer selling and increased competition from domestic mills for available supply. HRS/gulf 13.5 basis for January delivery was seen 20 cents higher this week at 2.20/bu pushing cash prices to $298/MT. HRS protein spreads widened with the 13.5/14.0 pro spread now $22/MT compared to $15/MT last week.
  • The SRW/corn spread narrowed $6/MT this week to $54/MT, down from $110/MT early August. The spread between SW and SRW narrowed as well ending at $25/MT, down more than 80 percent from the start of MY 2008/09.
  • Freight indices continued to fall with the Baltic Panamax Index (BPI) ending the week off 15 percent at 440. The Atlantic/Gulf to Asia component of the BPI fell 8 percent to 6,078 while the Pacific/Asia component was off 20 percent to 2,656.

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