USW of FacebookUSW on TwitterUSW on YouTube
February 9, 2007

(See attached file: PR070209.pdf)(See attached file: PR070209.xls)

Highlights
As anticipated, today's WASDE release was essentially a non-event for wheat, although the price forecast range was narrowed to the downside. A 2 MMT increase in Kazakh production is also noteworthy and explains their competitive bid in the last GASC tender.

Another strong sales report was positive for markets with traders reporting continuing interest from importers. Perhaps the long-awaited import interest resulting from the vacuum left by Australia has finally arrived.

CBOT SRW nearby futures were down 1 cent/bu from last week, while the KCBOT was down 2 cents and the MGE ended 3 cents up from last Friday's close.

The corn/SRW futures spread keeps edging down, currently 54 cents/bu at the CBOT, down from 59 cents/bu last week. The export spread is 25 cents/bu at Gulf ports.

A raft of bullish global production news has come out this week, affecting prospective 07/08 import markets. The Government of India lowered its estimate for the upcoming crop by 1.5 MMT to 72.5 MMT, and indicated that it may need to import wheat in 2007/08. Government sources in China report that continuing drought has reduced winter wheat area by 2%, representing a 2 MMT decline in production. Soil moisture continues to be severely deficit in the Maghreb region of North Africa where wheat heading begins in March.

Cold conditions in the northern U.S. SRW states seen as threatening late seeded plants were considered bullish. U.S. National Weather Service forecasts indicate ideal (warm and dry) spring weather for the region.

HRS basis prices are up this week on demand from domestic mills and a strong carry slowing farmer sales.

SRW/HRW basis prices remain generally unchanged at the Gulf. PNW basis prices up big again this week on continued strong export sales and slow movement from the country.

The HRW premium to SRW off slightly this week at 81 cents/bu ($30/MT).

SW has taken an independent direction with the premium to SRW rising 20 cents/bu this week to 53 cents/bu ($19/MT).

Barge rates continued to decline for the third week in a row, everywhere but the Illinois River where ice complicated logistics. Rates are now 25% to 48% ($5 to $9/MT) lower than this week last year.

Inclement weather has also slowed rail logistics. The USDA Grain Transportation Report shows grain movement has increased to all ports except the Texas Gulf. Rail deliveries in January to the PNW are up 18% over last year and 28% from the 4-year average while the Texas Gulf is down 39% from last year. Rates remain generally stable with only a small uptick in nearby shuttle cars.

Ocean freight rates on Asian routes were firmer compared with a week ago due to a flurry of activity ahead of the Chinese New Year break in China, as well as the start of the grain harvest season in Latin America. Rates moved up $1/MT in the both the Pacific and Atlantic. The PNW to Japan rate is $14/MT (64%) above year-ago rates while the Atlantic basin is up $21/MT (62%).

File Name
PR070209.pdf
PR070209.xls
2008-2013 U.S. Wheat Associates. All Rights Reserved
CCBot/2.0 (http://commoncrawl.org/faq/) - Is Mobile: Privacy Policy | Non-Discrimination Statementfalse