The OP's comment was on the price of feed going up. The best I can determine, the Russian wheat export is expected to drop 6 to 8 million metric tons this year compared to 2009. Romania's wheat export is expected to drop 0.3 million metric tons in 2010. Other major wheat exporters in the region, such as Ukraine and Kazakhstan are also expected to export less due to dry weather. This is just wheat, not other grains. Production of some of the other grains is down too. Then there is demand. Not just ethanol in the US but the demand in the emerging economies like China and India.
The following is an October 8 price report if you want to wade through it. This is the change in projections from September to October, not a total change for the year. Costs are higher because the total grain available on the world market is down but the demand is not down.
Futures prices traded sharply higher this week following the release of USDAs WASDE report. While the report was bullish for wheat, it was especially bullish for corn and soybeans, and spillover pushed wheat prices 60 cents higher on Friday. Corn and soybean prices also reached their maximum daily limits, with corn gaining 30 cents and soybeans gaining 70 cents. A weaker dollar provided additional support earlier in the week, leading to a 16-cent rally on Tuesday. Overall, CBOT nearbys gained 64 cents, closing at $7.19/bu. KCBT nearbys were up 69 cents, to $7.58/bu, and MGEX gained 58 cents, to $7.64/bu. Corn prices gained 62 cents this week, to $5.28/bu, and soybean nearbys were 78 cents higher, to $11.35/bu.
USDA released their October World Agricultural Supply and Demand Estimates (WASDE) on Friday. USDA reduced their 2010/11 global wheat production estimate by 1.6 MMT, to 641 MMT. The reduction was primarily due to a decreased U.S. production estimate, which USDA pegged at 60.5 MMT. USDA also reduced their 2010/11 global ending stocks projection, by 3.1 MMT, to 175 MMT. USDA pegged U.S. corn production at 322 MMT, down 12.6 MMT from last month, and projected U.S. ending stocks at 22.9 MMT, the lowest since 1996/97. The U.S. soybean production estimate was also cut, by 2.0 MMT, to 92.8 MMT.
Statistics Canada released their updated crop production estimates on Monday, pegging the total 2010/11 Canadian wheat crop at 22.2 MMT. This is down 2 percent from their July estimate and down 17 percent from last years crop. Spring wheat production accounted for 16.5 MMT, durum 3.0 MMT, and winter wheat 2.7 MMT.
The Ukrainian government announced this week that it will impose grain export quotas. The government initially announced a quota of 500,000 tons for milling wheat through the remainder of the calendar year. However, details of the quota could change when the Agriculture Ministry meets next week.
The Dollar Ice Index fell to 77.25 on Friday, reaching its lowest point since mid-January. The dollar has been falling steadily since the end of August, losing 7 percent since August 31. The dollar has lost ground against both the Yen and Euro, reaching a 15-year low against the Yen on Friday and its lowest point against the Euro since February.
The Baltic Panamax Index was down slightly this week, falling from 2,412 last week to 2,403 this week. Gulf/Japan was down $1, to $60/mt, while PNW/Japan was steady at $32/mt.
