August 2010 Prairie Economic Fundamentals
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Wheat surges to 22-month high
Wheat (ZW-FT680.00-13.25-1.91%) prices rose to 22-month highs on Monday as the worst drought in 130 years in major exporter Russia threatened to chop production, while a key lobby group cut its forecast for the country`s 2010 grain harvest.
Monday`s jump in U.S. wheat prices followed a 42 per cent leap in wheat futures on the Chicago Board of Trade, the biggest monthly advance since 1959, as damage from drought and flooding threatened crops from the Black Sea grain breadbasket.
Benchmark November milling wheat on Euronext surged to a fresh contract high in opening trade.
While markets have focused on Russia, concerns have started to surface regarding crops in the world`s fourth-largest exporter, Australia, as dry conditions threaten wheat in a key state.
Export Forecast Halved
The Russian Grain Union cut its 2010 grain crop forecast to 72-78 million tonnes from 81.5-85 million previously as a severe drought advanced in key producing regions, which showed no signs of abating.
Read the full article here.
Wheat (ZW-FT680.00-13.25-1.91%) prices rose to 22-month highs on Monday as the worst drought in 130 years in major exporter Russia threatened to chop production, while a key lobby group cut its forecast for the country`s 2010 grain harvest.
Monday`s jump in U.S. wheat prices followed a 42 per cent leap in wheat futures on the Chicago Board of Trade, the biggest monthly advance since 1959, as damage from drought and flooding threatened crops from the Black Sea grain breadbasket.
Benchmark November milling wheat on Euronext surged to a fresh contract high in opening trade.
While markets have focused on Russia, concerns have started to surface regarding crops in the world`s fourth-largest exporter, Australia, as dry conditions threaten wheat in a key state.
Export Forecast Halved
The Russian Grain Union cut its 2010 grain crop forecast to 72-78 million tonnes from 81.5-85 million previously as a severe drought advanced in key producing regions, which showed no signs of abating.
Read the full article here.
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Global wheat shortage feared as prices surge
Severe drought, brush fires and heat waves in Russia, Ukraine and Kazakhstan have driven wheat prices to their biggest one-month jump in more than 30 years, killing half the crop in some areas and reportedly fueling fears of global shortages.
The slump in Russian wheat production has pushed prices up 62 percent since early June, and last month saw the biggest and fastest increase since 1959.
The rise prompted warnings from food companies that prices for flour and products that use flour will soar, The Wall Street Journal reports.
Nonetheless, Russian assurances that its grain exports will remain stable despite crop-decimating heat and drought caused European wheat prices to fall today from their two-year high.
The Russian agriculture ministry said the country`s grain crop would drop to 70 million to 78 million metric tons this year, but insisted cereals exports would remain stable because of bountiful stocks. That is down from 81 million to 85 million tons.
The rise in wheat prices indicates that shortages in agriculture are coming, says Jim Rogers, chairman of Rogers Holdings.
"That`s the straw that broke the camel`s back," Rogers told CNBC. "We`re going to have much higher food prices over the next few years."
Read the full article here.
Severe drought, brush fires and heat waves in Russia, Ukraine and Kazakhstan have driven wheat prices to their biggest one-month jump in more than 30 years, killing half the crop in some areas and reportedly fueling fears of global shortages.
The slump in Russian wheat production has pushed prices up 62 percent since early June, and last month saw the biggest and fastest increase since 1959.
The rise prompted warnings from food companies that prices for flour and products that use flour will soar, The Wall Street Journal reports.
Nonetheless, Russian assurances that its grain exports will remain stable despite crop-decimating heat and drought caused European wheat prices to fall today from their two-year high.
The Russian agriculture ministry said the country`s grain crop would drop to 70 million to 78 million metric tons this year, but insisted cereals exports would remain stable because of bountiful stocks. That is down from 81 million to 85 million tons.
The rise in wheat prices indicates that shortages in agriculture are coming, says Jim Rogers, chairman of Rogers Holdings.
"That`s the straw that broke the camel`s back," Rogers told CNBC. "We`re going to have much higher food prices over the next few years."
Read the full article here.
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Wheat jumps to 23-month high as Russia bans exports
Wheat extended a rally to the highest price in 23 months as Russia, the world`s third-biggest grower, said it would ban grain exports from Aug. 15 because of the country`s worst drought in at least a half century.
A ban would be "appropriate" to stop domestic prices rising, Russian Prime Minister Vladimir Putin told a government meeting in Moscow Thursday. Mr. Putin`s spokesman Dmitry Peskov later said a temporary ban would start Aug. 15.
Wheat for December delivery, the contract with the largest open interest, advanced as much as 7.9% to US$8.155 a bushel in Chicago today, the highest level since August 2008. The contract was 7.8% higher at US$8.1425 as of 6:46 a.m. local time. Wheat surged 91% since trading as low as US$4.255 on June 9.
"Wheat prices may continue rising till the end of August," said Chris Yoo, manager of the global derivatives team at Samsung Futures Inc. in Seoul. "Consumers are likely to switch to consume rice."
A heat wave in Russia, dry weather in Kazakhstan, Ukraine and the European Union and excess rain in Canada are draining wheat stockpiles and dragging up prices of rice, soybeans and corn. Wheat has jumped faster than in the first two months of 2008 when a 41% gain to a record US$13.495 spurred concern over a global food crisis and sparked riots from Haiti to Egypt.
Read the full article here.
Wheat extended a rally to the highest price in 23 months as Russia, the world`s third-biggest grower, said it would ban grain exports from Aug. 15 because of the country`s worst drought in at least a half century.
A ban would be "appropriate" to stop domestic prices rising, Russian Prime Minister Vladimir Putin told a government meeting in Moscow Thursday. Mr. Putin`s spokesman Dmitry Peskov later said a temporary ban would start Aug. 15.
Wheat for December delivery, the contract with the largest open interest, advanced as much as 7.9% to US$8.155 a bushel in Chicago today, the highest level since August 2008. The contract was 7.8% higher at US$8.1425 as of 6:46 a.m. local time. Wheat surged 91% since trading as low as US$4.255 on June 9.
"Wheat prices may continue rising till the end of August," said Chris Yoo, manager of the global derivatives team at Samsung Futures Inc. in Seoul. "Consumers are likely to switch to consume rice."
A heat wave in Russia, dry weather in Kazakhstan, Ukraine and the European Union and excess rain in Canada are draining wheat stockpiles and dragging up prices of rice, soybeans and corn. Wheat has jumped faster than in the first two months of 2008 when a 41% gain to a record US$13.495 spurred concern over a global food crisis and sparked riots from Haiti to Egypt.
Read the full article here.
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Global wheat harvest looks worse than expected
WASHINGTON -- Devastating drought in Russia and neighboring countries has reduced world wheat harvest prospects more than expected, a U.S. government report showed on Thursday, threatening to renew a blistering price rally that has revived memories of 2008.
While world wheat stocks will remain well above crisis levels seen in 2007/08, the Agriculture Department cut its world wheat production forecast by 2.3% to 645.73 million tonnes in its August report, its first estimate since Russia, normally the world`s No 3 wheat exporter, banned shipments to conserve domestic stocks.
"The trade will open higher, but then realize that we are still actually above average for the world wheat. We have gone from excessively bloated stocks to above normal," said Rich Nelson, analyst with Allendale Inc.
But on soybeans and corn, traders were split over whether the market would focus on the USDA`s record high yield estimates -- bigger upgrades than had been expected in its first report based on field surveys -- or the fact that robust export demand forced it to cut back ending stocks forecast.
Read the full article here.
WASHINGTON -- Devastating drought in Russia and neighboring countries has reduced world wheat harvest prospects more than expected, a U.S. government report showed on Thursday, threatening to renew a blistering price rally that has revived memories of 2008.
While world wheat stocks will remain well above crisis levels seen in 2007/08, the Agriculture Department cut its world wheat production forecast by 2.3% to 645.73 million tonnes in its August report, its first estimate since Russia, normally the world`s No 3 wheat exporter, banned shipments to conserve domestic stocks.
"The trade will open higher, but then realize that we are still actually above average for the world wheat. We have gone from excessively bloated stocks to above normal," said Rich Nelson, analyst with Allendale Inc.
But on soybeans and corn, traders were split over whether the market would focus on the USDA`s record high yield estimates -- bigger upgrades than had been expected in its first report based on field surveys -- or the fact that robust export demand forced it to cut back ending stocks forecast.
Read the full article here.
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Churchill Airport to undergo $13.4-million updgrade, Harper says
CHURCHILL, Man. — Prime Minister Stephen Harper launched a week-long trip to Canada`s North on Monday by announcing a $13.4-million investment to upgrade this city`s airport on the shore of Hudson`s Bay.
"Canada`s regional and remote airports play a vital role in bringing us together as a nation and linking our communities to the world," said Harper.
The Churchill airport, located about 1,000 kilometres northeast of Winnipeg, operates year round and is considered an important hub for the North, including a gateway for tourism.
Harper said the investment shows the federal government is committed to ensuring northerners have access to the "goods, services and opportunities they need."
The airport upgrades will be complete by the fall of 2011. The money will be used to improve the Churchill airport`s taxiways, ramps, runways and roadway to the terminal building.
Harper said the work will "ensure the safe flow of people, goods and services" to and from northern communities, and will also create jobs and economic growth.
Read the full article here.
CHURCHILL, Man. — Prime Minister Stephen Harper launched a week-long trip to Canada`s North on Monday by announcing a $13.4-million investment to upgrade this city`s airport on the shore of Hudson`s Bay.
"Canada`s regional and remote airports play a vital role in bringing us together as a nation and linking our communities to the world," said Harper.
The Churchill airport, located about 1,000 kilometres northeast of Winnipeg, operates year round and is considered an important hub for the North, including a gateway for tourism.
Harper said the investment shows the federal government is committed to ensuring northerners have access to the "goods, services and opportunities they need."
The airport upgrades will be complete by the fall of 2011. The money will be used to improve the Churchill airport`s taxiways, ramps, runways and roadway to the terminal building.
Harper said the work will "ensure the safe flow of people, goods and services" to and from northern communities, and will also create jobs and economic growth.
Read the full article here.
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Warm weather boosts prairie grain forecasts
Maybe that whole rainy spring thing was a tad overblown after all.
Statistics Canada posted its first crops estimate report on Monday, and while the forecasts show general declines from 2009, they are nonetheless higher than the rather gloomy predictions made by the Canadian Wheat Board earlier this summer.
Overall production for the six major grains in western Canada (wheat, barley, oats, canola, flax and peas) is estimated at 44.8 million metric tonnes, a decline of 13.5% from 2009.
Meanwhile, wheat production is pegged at 20.5 million mt, while barley is forecast at 7.8 million mt. The estimates are about 11% and 4% higher than the CWB`s estimates in July after farmers reported widespread problems planting crops owing to stormy, rainy weather on the plains.
"Warm and dry weather in many areas have helped boost yields," Christine Healy, analyst with Scotia Capital, said in a note to clients. "We believe further upside to these production estimates could exist (assuming frost does not pose a major threat at harvest) given weather has continued to be favourable in many areas of western Canada since the survey time period."
Read the full article here.
Maybe that whole rainy spring thing was a tad overblown after all.
Statistics Canada posted its first crops estimate report on Monday, and while the forecasts show general declines from 2009, they are nonetheless higher than the rather gloomy predictions made by the Canadian Wheat Board earlier this summer.
Overall production for the six major grains in western Canada (wheat, barley, oats, canola, flax and peas) is estimated at 44.8 million metric tonnes, a decline of 13.5% from 2009.
Meanwhile, wheat production is pegged at 20.5 million mt, while barley is forecast at 7.8 million mt. The estimates are about 11% and 4% higher than the CWB`s estimates in July after farmers reported widespread problems planting crops owing to stormy, rainy weather on the plains.
"Warm and dry weather in many areas have helped boost yields," Christine Healy, analyst with Scotia Capital, said in a note to clients. "We believe further upside to these production estimates could exist (assuming frost does not pose a major threat at harvest) given weather has continued to be favourable in many areas of western Canada since the survey time period."
Read the full article here.