Flour Update:

Market Highlights

March,2008

USDA Crop Reports Summary 03/11 08:49

USDA cut ending stocks of soybeans and wheat in the U.S., left U.S. corn
ending stocks unchanged, and increased ending world stocks of wheat, corn and
soybeans. The record-low U.S. soybean ending stocks may warrant a bullish
reaction in the futures market Tuesday, said DTN Analyst Elaine Kub.

WASHINGTON (DTN) -- USDA cut its projections for U.S. ending stocks of both
soybeans and wheat but left corn unchanged in supply and demand tables released
early Tuesday.

DTN on-line customers, for full access to the supply and demand report
click:
http://usda.mannlib.cornell.edu/MannUsda/viewDocumentInfo.do?documentID=1194

DTN on-line customers, for DTN's exclusive audio comments on the report
click: http://listen.aghost.net/images/e0010013/usda.mp3

Projected U.S. soybean ending stocks for 2007/08 were reduced 20 million
bushels, to 140 mb. This figure was lower than even the most bullish pre-report
estimate, DTN Analyst Elaine Kub said, so this may be the number that yields
the most reaction on the futures markets Tuesday morning. U.S. wheat ending
stocks were cut 30 mb to 242 mb, which was within the range of pre-report
estimates.

Corn ending stocks remained at 1.438 billion bushels. "Ordinarily, one might
see some long liquidation by disappointed market bulls after such a report,"
Kub said, "but with buying and selling interest spilling over so easily from
one crop's futures market to another's, the corn futures market may be
susceptible to support from soybeans and wheat and therefore maintain its
higher trend."

Biofuels use figures, another category from the U.S. Supply and Use tables
that had potential to get some bullish reaction from futures traders, actually
came out bearish Tuesday morning, said Kub. Ethanol projections are unchanged,
but soybean oil use for methyl ester (biodiesel) was cut from February's
3,400-billion-pound figure to only 2,800 bp.

Corn exports remain pegged at 2.45 mb; but wheat and soybean export
projections, which were running well ahead of pace leading into Tuesday's
report, were both bullishly bumped higher, according to Kub. U.S. wheat exports
are now seen at 1.225 mb, and U.S. soybean exports are pegged at 1.025 mb.

World ending stocks for wheat, corn and soybeans were all increased. For
wheat, world ending stocks were raised 0.7 million metric tons to 110.4 mmt.
For corn, world ending stocks were projected 2.1 mmt higher, at 104 mmt, and
for soybeans, world ending stocks were raised 1.62 mmt, to 47.44 mmt.

The increase in corn global stocks reflects a 3-mmt hike in Brazil output,
with smaller increases in India and the Philippines. The increase in world
soybean ending stocks reflected an increase in production estimates for the
2006/07 crop year in Argentina.

For the wheat in the U.S., the lower ending stocks reflected an increase of
5 million bushels in food use and a 25 mb increase in exports. The
stocks-to-use ratio for wheat dropped to 10 percent, the lowest since 1946-47,
the department said. Global wheat stocks increased on expectations for bigger
crops in Brazil, India, Australia and the EU-27, partly offset by a reduction
in Saudi Arabian output.

February,2008



"A picture states a 1,000 words... look at this chart; just amazing what spring wheat has / continues to do."

January,2008

Export sales released on Thursday buy USDA reported 404,000 metric tons of wheat, 2,369,000 mts of corn, and 965,000 mts of soybeans. These sales numbers were on the high side of traders expectations. Egypt bought 180,000 mts of U S soft wheat overnight. This weeks export sales were over twice as many as last week and up 99% from the 4 week average. Rumors of Turkey, Pakistan, South Korea, Japan, and Jordan tendering for wheat in the upcoming weeks, signals that demand is still not being rationed.

Cold weather is expected to dip down into the midsection of the U S but adequate snow cover should protect the HRW wheat areas of the southern plains. SRW wheat areas are at risk.

Otherwise, more of the same is on tap for the wheat market next week on its price discovery mission to ration world demand.

Week Ending June 8th,2007

Wheat futures continued their march toward contract highs again this week; however, with winter wheat harvest closing in on the market, this week’s price action has been choppy. Possible freezing temperatures last night in Nebraska and Colorado along with some disappointing yields from the Easter freeze areas are supporting prices today.

This past Monday’s USDA crop progress report was supportive to winter wheat with a decrease of 4% points in the good/excellent category. This was countered by the continued increase in the spring wheat crop conditions. USDA reported that 85% of the spring wheat is in good/condition which is up another 6% from the previous week. Wet weather in Texas and Oklahoma has been hampering harvest progress as only 1% of the crop had been harvested as of Monday. Weather forecasts are drying out so there should be some harvest progress reported on this Monday’s report.

Thursday’s export sales report showed 347,000 metric tons and of that, 99,000 metric tons was HRS wheat. These estimates were in line with trade estimates and basically another non event.

Spot basis levels in Minneapolis continue to be sluggish. However, today’s pop in 15 protein basis levels of $0.20/bushel could be a sign that traders want to start to build in a protein spread on higher protein wheat as growing conditions are near ideal in the northern plains growing regions. The old rule of thumb is that there is only so much protein per acre of production (though not necessarily true with today’s agronomics). Traders are beginning to fear that both the HRW and HRS wheat crops at this stage of development have the potential to be low in protein, because of the high yield potential anticipated.

Week Ending April 13th,2007

Wheat futures rounded out the week on a strong note. Friday’s changes of next week’s weather forecast for the Corn Belt calling for cooler and wetter conditions, had corn closing out the week sharply higher with wheat tagging along. Traders are also still concerned about the damage to wheat from last weeks freezing temperatures. Recent price action has wheat futures moving back towards the highs of last fall. For the week, wheat futures gained $0.20-0.34/bushel with CHI leading MN and KC in inter-market spread trade. It should also be noted that front months intra-market spreads are very narrow with little carry.

Next week all eyes will be on Monday’s crop progress report. Traders will be looking at HRW and SRW wheat conditions, HRS wheat planting progress, and corn planting progress. Corn Belt weather forecasts will also be watched as we need to get 90 million acres of corn planted. Markets will be very quick to add risk premium into values if traders begin to see planting delays.

Week Ending February 2nd,2007

This past week did not produce much fundamental market moving news. Futures opened lower on Monday and tested some support levels, held these levels, and then worked higher to end the week unchanged to slightly lower.

The Canadian Wheat Board announced this week that they are increasing their wheat export goals by 10% to 13.3 million metric tons. Along with this news, Statistics Canada reported December 31st wheat stocks to be 22.3 million metric tons which is down about 7% from last year’s 23.9 mmt’s. These estimates were well below most analysts’ trade guesses. I talked to the CWB this week and they also are anticipating significantly decreased HRS wheat plantings due to producers switching to more durum and feed grain acres. It was these fundamentals that supported the futures market back up to last weeks closes.

Export sales announced this week by USDA totaled 560,500 metric tons with only 58,000 mt’s being HRS wheat. These sales were within trade estimate ranges.

Spot receipts this week in Minneapolis were the lowest in several weeks. The spot market has been very flat on the high end but it is noteworthy that the low end of the spot protein ranges is now very close to the high end. Protein premium spreads continue to be very flat with 15’s widening out on 13’s and 14’s due to west coast demand originated from specific lower ($) spread point locations.

Cold weather moving across the Midwest coming down from Canada this weekend and early next week is creating some talk about winter kill; however it appears most HRW wheat areas do have adequate snow cover so any potential damage should be minimal. SRW wheat areas in Mo, IL, and IN are the most vulnerable due to spotty snow cover.

Wheat should continue to follow corn as we go forward into spring. The WN/CN spread that the trade feels wheat will work its way into feed rations is about $.60/bushel premium to CN. Tonight’s close is essentially right there. HRS wheat planting intentions will be an important focus in the upcoming weeks as traders assess various wheat supply/demand scenarios and their implications on prices.

Week Ending January 19th,2007

Wheat traders came back from the long weekend with a different mood then they had on report day last Friday. Export shipments were dismal; the HRW plains states got another shot of moisture, and huge net fund long positions were the Tuesday morning market moving fundamentals. This recipe sent futures markets lower. Other market moving news this week was Canadian plantings estimates, this morning’s good export sales, and a private analyst’s US planting estimates. The wheat market chopped around all week with strong daily early trading and weak closes (not a sign of a healthy market).

USDA reported export of 825,000 metric tons, which was well above traders expectations. It seems ironic, that all we have been hearing about is the lack of export news and now that we get some, the market reacts negatively. This number was the 2nd largest sales number in the last 7 months.

Basis levels in Minneapolis were essentially unchanged this week with a very small car count. It appears that protein spreads have narrowed on the lower proteins, and deferred offers are reflecting a small premium for higher proteins, likely do to some better West Coast demand.

With wheat markets gaining sharply recently on the heels of corn and ethanol demand, commodity funds have accumulated huge net long positions. Falling oil prices at some point will put the skids to rising ethanol/corn prices. As we go forward in the upcoming weeks, fundamental news may be sparse, which will add volatility and uneasiness. Remember, bull markets need daily feeding!

Week Ending January 12th,2007

“BOOM”! That would probably be a one word reaction to Friday’s market action. Twelve days into the New Year, with commodity markets being on the defensive for the past 2 weeks, the USDA January crop report on Friday reversed market direction with violent vengeance. Wheat futures had been weak due to commodity fund liquidation, index fund reallocation, and much improved growing conditions in the plains HRW wheat areas.

Corn production fell 210 million bushels (-2%) from the December estimate and down 577 million bushels (-5%) from last year. Corn ending stocks were down a whopping 183 million bushels (-20%) from the December estimate AND down 1.219 billion bushels (-62%) from last year.
Grain futures opened up sharply higher with corn locking up the 30 cent limit early on, soybeans were up 40-50 cents, and wheat was trading up the 30 cent limit by mid session. Soybeans and wheat sold off some on the close; however, corn closed the day locked limit up.

Spot basis levels in Minneapolis were firmer this week as domestic mills appear to be working through the glut of first half January “too arrive” applications. Cold weather is forecast for the northern plains this coming week, so wheat loadings may slow down some.

With today’s fundamental news, it is now going to become a battle between individual crops for a finite amount of planted acreage this spring. The producer will be studying revenue/input costs for all crops and he will grow those crops that impact his net income the most. Given tonight’s grain futures prices, spring wheat NEEDS to buy acres. Corn, soybeans, and barley, all are at an economic advantage to wheat. It appears the dynamics are changing, and the wheat end user cannot 100% count on the producer’s historical romance with wheat to continue without price reward.

Week Ending January 5th,2007

Wheat futures ended 2006 with a rally and began 2007 with sharp losses. Traders came back to work on Wednesday after a long 4 day break and immediately the bears took control of the wheat futures until today never looked back.

The major catalyst was the large moisture laden storm that began in Colorado and moved across the plains dumping much needed wet snow on parched dormant wheat plants. Today’s noon forecasts have the plains drying out with no active storm systems on the radar and temperatures continuing to be mild. This morning’s export sales figure was a meager 135,000 metric tons which was in line with trader’s expectations. Other negative fundamentals that are weighing on futures markets are the US dollar gaining strength, weakness in the corn market, and large commodity fund long positions. Rumors of index funds reallocating risk positions out of grains and back into energy and stock indexes also are pressuring prices.

Cash spot receipts in Minneapolis appeared meager at face value as the daily car counts were less than 100 each day this week. However, it appears that all domestic mills were deluged with January applications on the first trading day of the month. Thus spot demand for cash wheat is almost nonexistent. Basis levels continue to be stagnant. Flour sales this week were very active, even in deferred months as buyers took advantage of the large futures price break to go ahead and extend coverage. “To arrive” offers have strengthened due to the futures losses as the producer has gone into the hold mode, looking for a rebound in prices back to near their recent highs.

With this week’s break, futures should chop around in a range early next week waiting for new fundamentals to either break technical support levels or push back through overhead resistance. Spot basis levels should regain some footing as domestic mills grind through their recent glut of January applications. Next Friday USDA will release in its January crop report, winter crop production wheat seedings, domestic and world supply/demand, and U S ending grain stocks.

Week Ending December 22nd,2006

Wheat futures have rallied sharply this past week driven by strength in corn, dryness in HRW wheat areas, commodity fund buying, and anticipated influx of new index money pouring into commodity markets after January 1st. Wheat futures have been in a declining channel since making new highs in October. With the recent strength and the ability to push above moving averages and close above the downward trend line, technical charts are beginning to turn positive.

Thursday’s weekly export sales report showed 455,100 metric tons, which was in line with trader’s expectations. Also yesterday, an issued drought monitor reported rapidly expanding abnormal dryness across the U S this past week. Even though yesterday’s huge Colorado storm should bring moisture to some HRW wheat areas, because of the length of time drought conditions have been occurring, there is a growing new crop supply concern. The corn market continues to charge higher pulling wheat right along.

Next week will feature continued thin holiday trade with the potential for wide price swings due to lack of liquidity, as many traders are absent.

Week Ending November 24th,2006

Wheat futures were steady to firmer this past week. Being a holiday week, volume was thin and fundamental market moving news was scarce. Wheat essentially followed the corn market except on days when wheat gained on corn to bring the wheat/corn-spread relationship back inline.

Next week futures trade should resume its normal volume as traders return from holiday break. Fundamentals next week driving the futures market will be December deliveries, plains weather, new exports interest and the whims of the corn market. Today’s close was right at the resistance level. We will have to see next week, whether there is enough market strength to push into new territory and open up a new upside range.

Week Ending November 10th,2006

Wheat futures ended the week moderately lower again with this week being the 4th consecutive week of lower closes. USDA estimates out this week confirmed the supply side of the market both domestically and worldwide. The other factor driving this week’s market is the strength in row crops, particularly corn.

Looking ahead to next week, absent any new world demand emerging, wheat futures will tag onto the coat tails of corn. With the huge speculative length in corn and wheat, market longs may tire and head for the door as the market corrects an overbought condition.

Week Ending November 3rd,2006

Wheat futures closed the week out in a quiet fashion but again put in a turbulent week. There was divergence between wheat and row crop futures corn as soybeans were up 13-15 cents/bushel compared to wheat futures loosing 5-16 cents/bushel. Thursday’s market saw a sharp run up followed by a violent sell off in very nervous market topping action. Featured fundamentals were new commodity fund buying after the 1st of the month, strong weekly export sales, and strong row crop prices. For the week, CHI lost to MN and KC in inter-market spread trade.

Private Grain Analyst Informa Economics released private world production estimates Friday. They pegged Canada at 27 million metric tons, Russian wheat production at 44 mmts, Argentina production at 13.7 mmts and Australia’ crop at 11.5 mmts. With the exception of Australia, these countries had slight increases in production since their last forecast.

Monday’s weekly crop progress showed the winter wheat crop is now 91% planted/73% emerged, compared to last weeks 86%/65%, and the 5 year average of 91%/76%. The crop condition is rated 60% good/excellent compared to last week’s 58% g/e and 61% 5 year average. It would appear based on these estimates that the crop is going to go into winter dormancy in above average condition, but will need good spring moisture in order for one to expect a large production number.

Traders will again be watching for export sales and the stamina of the speculative community for signs of price direction in the coming week.

Week Ending October 27th,2006

If one compares last Friday’s wheat futures closes to today’s closes, one might think this past week’s market action was a “yawner”. This assumption could not be further from the truth. Just today, WZ had a $.20/bu trading range and $.42/bu weekly trading range. Bullish fundamentals this week were the continued realization of shrinking world wheat supplies and confirmation of Iraqi wheat purchases. Countering these fundamentals were the recent weak technical action due to overbought conditions. For the week, wheat futures were unchanged to only down a nickel with KC gaining slightly on MN and CHI in inter-market spread trade.

The Australian Wheat Board reduced the Aussie wheat crop again to 9-11 million metric tons from the previous estimate a few weeks ago of 12-15 mmts. This news pushed wheat futures sharply higher on Wednesday within a dime of contract highs. The buying then dried up and prices rolled over and headed south, closing moderately lower for the day and signaling a major price reversal. Thursday’s lower close put more credence into the reversal. Argentina’s weather has been improving so production there should have stabilized or even increased.

The US winter wheat crop is now 86% planted with 65% emerged which is right inline with the 5 year averages. USDA also started rating the winter wheat crop conditions this week and the crop is 57% good/excellent and that is identical to last year’s rating at this time. It was noted the SRW plantings in a few states are lagging due to MI and OH due to cool wet conditions. Weather conditions in HRW wheat areas could use some more moisture before the crop goes into dormancy but there is precipitation forecast for those areas in the upcoming days.

Even though this past week exhibited historical market topping action, the coming week promises more volatility in the price discovering process.

Week Ending October 13th,2006

This past week had to be one of the most volatile weeks in wheat futures history.

Catalysts for the gigantic move this week were the realization of the tightening of world wheat supplies. Early in the week market sources lowered Australian production due to drought conditions to 11-13 million metric tons, down from last year’s 24.5 mmts. This fundamental activated the fear emotion in soft wheat bears and the fireworks began with everyone heading for the door at the same time. Market liquidation caused by margin calls also fueled the rally. USDA confirmed the bear’s worst nightmare on Thursday estimating Australian production at 11.0 million metric tons. USDA also reduced the world wheat ending stocks at 119.0 mmts which is down from last months 26.4 mmts. US ending wheat stocks were pegged at 418 million bushels compared to last month’s estimate of 429 mbs. About the only bearish wheat # this week was Canadian production which USDA estimated at 26.3 mmts which was up from last months 25.9 mmts. Other estimates in USDA’s Thursday report were bullish corn and soybean production along with very price friendly US carry out stocks.

Monday’s weekly crop progress showed HRW wheat planting to be 69% completed versus 68% last year and 70% 5 year average. With the recent price rally, one can surely expect increased acreage planting. The southern plains is still dry, however, scattered showers have popped up in random areas. The extended 6-10 day southern plains forecast calls for cooler temperatures and normal precipitation.

Spot receipts this week in Minneapolis were less than previous weeks; however domestic mill demand is still very sluggish. Protein spreads appear to be narrowing with low protein gaining on the highs. Resellers are struggling to find low 14 pro trains for application as many millers are capping protein levels and rejecting high protein trains for application on low protein contracts.

Week Ending October 6th,2006

What a wild week this was in the wheat futures market. Continued talk of tight world supplies caused by dryness in Australia, Argentina, and renewed dryness in the U S southern plains were the catalysts that influenced this week’s trading. For the week, wheat futures gained $.06 -.21/bushel. With all the dryness affecting world wheat supplies and the abundance of high protein hard wheat, demand for low protein soft wheat could increase.

Traders have been waiting for exports to pick up these past weeks and this week some long awaited confirmations occurred. Iraq purchased 300,000 metric tons of HRW wheat in two different announcements. Although traders were expecting more, this confirmation may be an omen of upcoming business due to tightening the world wheat supply.

This week’s weekly crop progress report showed 54% of the HRW wheat has been planted compared 53% last year and the 5-year average of 56%. After some good moisture the last several weeks, dryness has started creeping back into the major HRW wheat production areas in the southern plains.

Spot cash receipts this week in Minneapolis were quite heavy compared to past weeks. Basis levels have struggled the last few weeks. Due to the run up in futures prices, producers have sold a fair amount of wheat on a “to arrive” basis. Railroad placement dates are mostly current. In addition, with freight showing up on time and row crop harvest getting off to a slow start, country elevators are being forced to ship wheat into the spot market as opposed to canceling rail freight orders in a sloppy freight market. It is very unusual to see railroad service current in the thick of row crop harvest. Domestic mill pipelines are very full and without exporters stepping in to cover needs, the cash market continues to be sloppy at best. Historically, we usually see a basis appreciation trend develop in the September to mid November time frame, but it appears we may not see a significant basis rally this year.

Week Ending September 22nd,2006

Wheat futures put in a strong performance this week based on last Friday’s technical reversal and good follow through buying this week. Shrinking world supplies due to dryness in Australia along with continued export optimism were contributing fundamentals to this weeks price rise. For the week, wheat futures advanced $.18 to $.27 with CHI leading MN and KC in inter-market spread trade.

This week the Australian Bureau of Agricultural and Resource Economics estimated this year’s crop at 16.4 million metric tons compared to the September USDA estimate of 19.5 mmts. This was about a 16% decrease due to the drought conditions of this summer. Dry conditions in Argentina and other countries are contributing to the shrinking of world wheat stocks.

Export sales released yesterday were on the high end of expectations at 519,500 metric tons. HRS wheat composed 117,600 mmts. Iraq had a delegation in the U S this week so there is speculation that they are looking to import up to 750,000 metric tons of wheat in the near future. Based on their past buying habits, any sales to Iraq are long drawn affairs so traders have gotten reluctant to believe it until it actually happens.

Technically it looks like wheat may have made its harvest lows and with this week’s price rally, has risen to technical levels that have established a narrow price range between the 20 and 40 day moving averages. We will now need new fundamental news in the form of exports to push prices into new levels, or else the markets will just chop around in the near term.

Week Ending September 15th,2006

Wheat futures ended the week with a little bounce but overall for the week, the market was down $.16 -.24/bushel with CHI losing to MN and KC in inter-market spread trade. Not a lot of market making news out this week. Not much in ending stocks news, coupled with the lack of other fundamental news, wheat futures retreated in a southerly direction and slid lower the rest of the week. The lack of export interest continues to weigh on futures market now that we know what the supply side of the equation is going to be. With the break from the summer highs in futures prices and basis levels off considerably, the U.S. should be competitive in the world market and gain additional export business.

Week Ending August 4th,2006

Wheat futures put in a very volatile week with wide technical swings the prominent feature. Bullish and bearish fundamentals this past week affecting prices were stabilizing HRS wheat crop conditions, good HRS wheat harvest progress, good weekly export sales, and friendly production estimates of US and Canadian HRS wheat.

HRS wheat weekly crop ratings showed continued slippage with all states showing a decline of 1-3 percentage points in the good/excellent category. Just 32% of the crop is in the good/excellent category. This will more than likely be the last crop condition report of the season. Early combine reports are indicating good quality everywhere, better yields than expected, and widely varied protein levels. What is surprising is the HRS wheat harvest progress of 22% versus only 7 % last year. Given this past week’s hot temperatures, traders will be expecting over 50% harvest completion in Monday’s harvest progress report. HRW wheat harvest is virtually finished with 91% harvested compared to 88% last year. Yesterday’s weekly all wheat export sales report totaled 583,400 metric tons, which was 80% over the 4-week average. HRS wheat exports were pegged at 165,700 metric tons. The Canadian Wheat Board released their latest estimate of the Canadian all-wheat crop at 22.7 million metric tons versus their June estimate of 23.6 mmts (-4%) and 24.8 mmts (-8 ½ %) last year.

With the full onset of HRS wheat harvest, basis levels have been weakening. South Dakota spot receipts are drying up as the harvest moves into North Dakota.

This afternoon’s (Friday 8/4) National weather Service 6-10 day forecast (Aug 10-14) continues to show above normal temperatures and below normal moisture prospects for the central US from Texas to North Dakota. We are approaching the HRW wheat planting window and we will need significant moisture in the next 45 days to ensure the new crop gets off to a good start.

Week Ending July 28th,2006

The wheat market seems have fully digested the shortness of the HRS wheat crop. Monday’s USDA crop progress report appears to confirm that crop conditions are stabilizing and the trade will be waiting the outcome of actual combine harvest #’s. HRS wheat conditions were virtually unchanged at 34% in the good/excellent category. HRW wheat harvest was almost complete (86% harvested) with Montana being the only major state left at 47% harvested.

HRS wheat harvest in North Dakota should be in full swing next week. This week the Wheat Quality Council Annual tour has been surveying HRS wheat fields across the state of North Dakota and came up with an estimate of 31.7 bushels/acre. A report out of Canada this week indicated crop development ahead of normal and hot and dry weather has stressed crops especially in the Red River Valley region of Manitoba. Thus yield expectations are going down and protein expectations are going up. They are expecting harvest to begin in mid August. Therefore, extreme temperatures and little rainfall still have time to adversely affect crop development.

Basis levels in Minneapolis had a weak tone this week as it appears the eastern South Dakota HRW and HRS wheat crops are better than earlier thought. It appears that the short crop in South Dakota which was widely advertised early on, prompted domestic mills to put additional “to arrive” coverage on and consequentially now have pipelines very full. The question remains, when this near term glut of wheat passes, do mills have August adequate coverage and does the producer look at the current price structure and, because there is going to be a short HRS wheat crop, just put it away and let the market work.

Producers and HRW wheat traders are continuing to watch closely the long range temperature and moisture outlooks for HRW planting. Moisture levels are still very parched from Texas to South Dakota and the next 6 weeks are important to get subsoil levels recharged before the 2007 HRW wheat crop is planted.

Next week traders will be watching North Dakota combine results, new crop producer selling, Canadian weather, HRW wheat moisture prospects, and any hints of increased demand developing. Without any new bullish fundamentals, the bull is on life support.

Week Ending July 7th,2006

Wheat futures rallied sharply again in MN this past week on hot weather forecasts for the northern HRS wheat growing areas. A well respected private crop analyst firm released their HRS wheat July estimate of 475 million bushels which is 30 million below last year and is the smallest HRS wheat crop since 2002. HRW wheat production is estimated at 1.287 million bushels versus the USDA 1.264 million bushel USDA June estimate. HRW wheat traders are now focusing on demand while the HRS wheat traders are still looking at the supply side of the equation, thus the disparity of the MN and KC markets.

On Monday of this week, the USDA released its June acreage report which showed HRS acres to be 14.6 million acres versus 13.9 million acres on the March estimate. USDA also released June 1st stocks at 568 million bushels which was 20 mb higher then the average trade guess. These neutral #’s were ignored by the bullish weather forecasts and the market took off. Monday afternoon’s crop progress report confirmed trader’s worries of the continuing deterioration of the HRS crop.

Weekend weather and next week’s North Dakota and Canadian forecasts will drive Monday morning’s opening. Buckle up and assume the brace position, its “summertime in the country”!

Week Ending June 23rd,2006

Wheat futures put in a strong performance this week spurred on by the deterioration of the HRS wheat crop and the realization of the short HRW wheat crop. Strength in the MN cash markets this week have narrowed the intra-market N/U spreads from a carry to inverted due to the uncertainty of the both the HRW and HRS wheat crops.

HRW wheat crop conditions remained unchanged this week remaining at 29% good/excellent while HRS wheat declined a significant 7% in the g/e category to 60. This week’s deterioration of HRS in MN and ND is concerning given the overall HRW wheat crop prospects. Harvest is progressing ahead of last year with 38% completed as of Monday compared to 17% at this time a year ago. There were some showers around this week that may have hampered harvest progress and affected Test weights. Even so, Monday’s weekly crop progress should show Kansas well along and combines beginning to roll in Nebraska.

Spot basis levels in Minneapolis jumped significantly as domestic mills were bidding aggressively for loaded 14 protein trains. Even though spot receipts are higher this week (see above table); the majority of the cars for sale were sub milling quality with high damage and vomitoxin levels. Producers sold a percentage of their new crop on the price run up this spring, however with deteriorating crop conditions, growers will tend not to sell any more old crop till there is confidence new crop bushels will be available to cover early sales. Spot basis levels are going to be very volatile in the near term with large daily swings depending on domestic mills’ needs on any given day.

HRS wheat crop progress ratings, weather forecasts, and HRW wheat harvest progress will be the major fundamentals driving wheat prices early next week.

Week Ending June 16th,2006

Wheat futures have been under pressure all week due to several fundamentals. Precious metals and energies have been weak, combines are rolling across Kansas, and showers have been occurring in North Dakota. The market appears to have digested most of the HRW wheat crop damage as the deterioration has slowed. Even though next week’s crop progress will likely show continued deterioration in South Dakota and Nebraska, the HRW wheat crop conditions are basically “yesterday’s news”. The trade appears to be comfortable with the HRS wheat crop, but history tells us, although it is easy to grow a wheat crop, a “quality milling crop” is a long ways from the bin. The wheat futures market will need some new fundamental to push into new highs. Row crop weather scares and HRS wheat deterioration are two possibilities. For the week, futures markets lost $.12–.16/bushel with KC losing to MN and CHI in inter-market spread trade.

HRW wheat crop conditions improved slightly last week gaining 2% in the good/excellent category to 29% g/e while HRS wheat declined 2% in the g/e category to 67% g/e. As of Monday, the HRW wheat harvest was 21% complete, compared to 8% last year. Thursday’s export sales reported a respectable 188,000 metric tons of HRS wheat. Also this week, one widely read private analyst increased HRS wheat plantings by 1.1 million acres which is about 7% over last year. The Canadian Wheat Board released a HRS wheat planted acreage estimate of 20.015 million acres, which is up about 500,000 acres from Stats Can’s April number by nearly 2.5%.

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Week Ending June 17th,2005

Week Ending June 10th,2005

Week Ending June 3rd,2005

Week Ending May 27th,2005

Week Ending May 13th,2005

Week Ending May 6th,2005

Week Ending April 29th,2005

Week Ending April 22nd,2005

Week Ending April 15th,2005

Week Ending April 8th,2005

Week Ending April 1st,2005

Week Ending March 25th,2005

Week Ending March 18th,2005

Week Ending March 11th,2005

Week Ending March 4th,2005

Week Ending February 25th,2005

Week Ending February 18th,2005

Week Ending February 11th,2005

Week Ending February 4th,2005

Week Ending January 28th,2005

Week Ending January 21st,2005

Week Ending January 14th,2005

Week Ending January 7th,2005

Week Ending December 17th,2004

Week Ending December 3rd,2004

Week Ending November 19th,2004

Week Ending November 12th,2004

Week Ending November 5th,2004

Week Ending October 29th,2004

Week Ending October 22nd,2004

Week Ending October 15th,2004

Week Ending October 8th,2004

Week Ending October 1st,2004

Special Announcement September 24th,2004

Week Ending September 24th,2004

Week Ending September 10th,2004

Week Ending September 3rd,2004

Week Ending August 27th,2004

Week Ending August 20th,2004

Week Ending August 13th,2004

Week Ending August 6th,2004

Week Ending July 30th,2004

Week Ending July 23rd,2004

Week Ending July 16th,2004

Week Ending July 9th,2004 Week Ending July 2nd,2004

Week Ending June 25th,2004

Week Ending June 11th,2004

wheat is off to a good start, offsetting some of the losses. 

Week Ending June 4th,2004

Week Ending May 21st,2004

Week Ending May 14th,2004

Week Ending May 7th, 2004

Week Ending April 30th, 2004

Week Ending April 23th, 2004

Week Ending April 16th, 2004

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Week Ending April 2nd, 2004

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Week Ending March 12th, 2004

Week Ending March 5th, 2004

Week Ending February 20th, 2004

Week Ending February 13th, 2004

Week Ending February 6th, 2004

Bitter cold and stormy winter weather made a bad situation worse this week as rail service continued to be painfully slow. Wheat conditions have not been impressive, but the share of moisture in the crop could protect the wheat from the cold, and improve conditions in the spring. Higher base prices due to lack of wheat movement offset the lower futures and prevented flour prices from moving lower. Current market factors are likely to be with us for the next few weeks at least, flour prices could remain at or near the current levels.