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May 25, 2012

(See attached file: PR 120525.pdf) (See attached file: PR 120525.xls)

  • Futures markets closed lower this week after posting the largest single-week gain in 16 years last week. The strong gains spilled over into Monday but uncertainty in the global economy led to profit taking in the wheat markets mid-week. A stronger dollar and much needed rain in Russia added to the pressure. The July contract on all three exchanges rallied 11 cents or more on Friday, supported by continued dry weather and deteriorating crop conditions in the U.S. plains. CBOT closed 15 cents lower on the week at $6.80/bu and KCBT closed at $7.00/bu, a 5 cent loss. MGEX lost 3 cents to close at $7.86/bu. CBOT corn lost 58 cents on the week to close at 5.79/bu and CBOT soybeans closed at $13.82/bu, a 23 cent loss.
  • In its weekly crop conditions report on Monday, USDA rated the U.S. winter wheat crop at 58 percent good to excellent, down from 60 percent last week and up from 32 percent last year at this time. Crop ratings in Kansas, the largest producer of winter wheat, dropped dramatically due to extremely dry weather. USDA rated 43 percent of Kansas wheat as good to excellent compared to 52 percent last week. The percentage of wheat rated as poor to very poor increased from 16 percent last week to 22 percent this week. USDA showed total U.S. spring wheat planting as 99 percent complete, compared with the 5-year average of 78 percent. It pegged crop emergence at 86 percent, up from 50 percent last week and 68 percent this week last year. The deteriorating crop conditions helped move futures markets higher on Monday and Friday.
  • The International Grains Council (IGC) reduced is 2012/13 world production forecast from 676 MMT last month to 671 MMT. IGC attributed the reduction to deteriorating production prospects around the world.
  • Black sea analysts expect the region’s wheat production to fall below 2011/12 levels. According to Russian grain analyst SovEcon, Russian wheat production will fall 3.0 MMT from 2011/12 to 53.0 MMT. Ukrainian consultancy UkrAgroConsult forecast Ukraine’s production at 14.2 MMT, down from 20.6 MMT in 2011/12 and slightly lower than a previous forecast. USDA currently projects 2012/13 Russian production at 56.0 MMT and Ukrainian production at 13.0 MMT.
  • The Baltic Panamax index is down 40 percent in the last month, closing lower again this week at 1,034, down from 1,274 last week. Weakening world economies and delayed shipments from Chinese steel mills are contributing to the freight slowdown.
  • The ICE Dollar Index closed higher this week at 82.52, up from 81.42 last Friday. The stronger dollar pressured wheat markets mid-week.

File Name
PR 120525.pdf
PR 120525.xls
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