FEED WHEAT 

·    US corn futures break through $5/bushel for the first time in 2 years as yields continue to disappoint in the Eastern corn belt.  Traders believe that yields could improve in the west, however, many are expecting further yield            cuts in next month’s USDA report. 

·    Harvest was reported at 18% complete against 11% last week and 10% as the 5-year average. 

·    Frosts have hit crops in Canada’s Alberta region, although wider frosts have been delayed.  Frosts remain a concern as many crops are behind normal growth, leaving them vulnerable to damage that reduces quality.

·    The Argentine government sees the 2010/11 wheat crop at 10.0-11.2mln/t in its first official estimate for the new season. 

·    Russia’s 2010 grain crop may fall to below 60mln/t report SovEcon.  Devastated by drought, 55mln/t of grain by bunker weight had been harvested by September 22, down 32% from a year ago. 

·    Agriculture Ministry has cut its forecast for the area sown with winter grains this year to 15mln hectares from an initially target of 18.8mln. 

·    Egypt’s GASC purchases 220,000t of US wheat for November 11-20 shipment. Since the start of the 2010/11 season on July 1, GASC has purchased a total of 1.87mln/t of French, US and Canadian wheat. 

·    The ‘yield rally’ in corn has supported US wheat, as perceived further cuts in corn production and stocks levels could ignite further wheat demand within the US. 

·    EU wheat levels have moved off the recent highs, as the strengthening Euro dampened hopes for EU exporters competing against the US for world export markets. 

In summary, weather and yield premiums have been factored into the recent price rallies over the past weeks.  Bull markets need constant feeding to move higher and, unless they are fed, this leaves the market vulnerable to profit taking.  Long-term, the demand for quality wheat will remain constant, and this should support feed wheat levels, although most are now predicting another large global wheat area to be planted for the 2011 harvest.