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March 11, 2011

(See attached file: PR 110311.pdf)(See attached file: PR 110311.xls)

Highlights:
  • It was a bearish week for wheat futures as prices fell to their lowest levels in the past three months. Prices were pressured by concerns over the global economy and commodity demand due to higher oil prices. Beneficial rainfall in the U.S. Plains and China, a bearish WASDE report, and a stronger dollar also contributed to the losses in the futures markets this week. The powerful earthquake and tsunami that hit Japan on Friday was a bearish factor as well, fearing the damage could slow Japan’s economic growth and commodity imports. Overall the CBOT March wheat contract lost $1.05/bu this week, closing at $6.95/bu on Friday. KCBT nearbys were down 97 cents, to $8.20/bu, while MGEX nearbys lost 99 cents, to $8.53/bu. With expectations for a large South American soybean crop, CBOT nearby soybean prices lost 81 cents on the week, closing at $13.26/bu. The CBOT March corn contract was down 62 cents from last Friday, to $6.59/bu.
  • USDA increased their 2010/11 global wheat output projection in their World Agricultural Supply and Demand Estimates (WASDE) this week. USDA projected world wheat production at 648 MMT, up 2.2 MMT from last month. The increase was primarily due to greater projections for Argentina and Australia, which were both up by 1.0 MMT, to 15.0 MMT and 26.0 MMT, respectively. USDA also reduced their 2010/11 export projections for the EU, Ukraine, and the U.S. Projected EU exports fell by 0.5 MMT to 21.0 MMT, Ukrainian projected exports fell by 1.5 MMT to 4.0 MMT, and the U.S. forecast fell by 0.7 MMT to 34.7 MMT. Due to the increases in production and reductions in exports, USDA’s 2010/11 global ending stocks forecast was up, from 178 MMT last month to 182 MMT this month.
  • Soft red winter FOB premiums were up this week due to higher barge rates. SRW FOB basis for nearby delivery climbed from $1.00/bu last week to $1.10/bu this week.
  • Hard red spring FOB premiums continue to climb due to strong domestic demand and tight supplies. Gulf HRS 13.5 FOB basis climbed to $2.60/bu, up from $2.35/bu last week.
  • The CBOT corn/wheat spread for the March 2011 contract fell to a new low this week. The spread stood at $0.36/bu on Friday, down from $0.79/bu a week ago and from $1.64/bu a month ago.
  • The ICE Dollar Index was stronger this week, providing downward pressure on commodity prices. The index reached a two-week high at 77.20 on Friday and was up from 76.40 last week. The index received support from a weaker Euro following the credit rating agency Moody’s downgrade of Spain’s sovereign debt rating.
  • Freight rates were higher again this week. The Baltic Dry Index (BDI) reached a two-month high this week due to increased demand for iron ore from China and increased grain cargo bookings as the South American crop hits the market. The BDI closed at 1,562 on Friday, up from 1,346 a week ago. The Baltic Panamax Index was also up, climbing from 1,983 last week to 2,132 on Friday.

File Name
PR 110311.pdf
PR 110311.xls
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