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More news >OpenviewMarch 5th, 2010
Wheat futures
| 04.03.10 | 7 Days | 30 Days | 90 Days | |
|---|---|---|---|---|
| May 10 | £94.75 | -1.70 | -6.45 | -4.05 |
| Nov 10 | £101.50 | 0.85 | -4.70 | -14.70 |
Currency
| £/$ | 1.5047 |
| £/Euro | 1.1082 |
| $/Euro | 1.3582 |
Interest rate
| Base | 0.50% |
International
- International markets slow
International grain markets have had another erratic and slow week. Futures markets have been choppy as foreign exchange influences (US$) and general commodity buying fight against the fundamentals which has been the pattern for some weeks now.
Next week will see the March USDA world supply and demand estimates issued which will include a revision of some states corn yield estimates. For the moment this will be enough to keep a lot of players away from the market.
The EU has been equally slow with consumers reluctant to buy, citing high stocks and a belief that prices will work lower as time goes on. They will be right to a point, but intervention parity beckons in EU areas farthest from ports.
MATIF wheat futures are close to contact lows and are within €5 of where many traders calculate intervention parity to be. Exports have been routine at 320K, which is not quick enough to clear the surplus.
Outlook: We are on the cusp of attention turning to the emerging winter crop which will not be supportive if they have over wintered well.
Wheat
- Sterling volatile
- Grain trading volatile
- DEFRA issues UK supply and demand
Fears of a hung parliament saw sterling weaken significantly (see OSR for full details) which spooked shorts into the old crop feed wheat market and at one point futures values gained £4 from the lows. Physical values reflected about half of this gain as exporters and consumers stayed away from the market. By the end of the week prices had returned to the pre crisis level with £90 ex farm now only available for late summer collection. Milling premiums are broadly unchanged, but with millers boasting good cover premiums look vulnerable.
DEFRA issued a revised supply and demand sheet for the UK with the wheat surplus estimated at 2.2 mln which is only slightly higher than the December estimate. This modest change is comprised of the higher crop estimate (14.4mln) confirmed in January, higher imports (which are now more in line with trade forecasts) but offset by higher wheat usage in the feed sector as cold weather reduces forage availability. Hidden away in the text was a comment about the new ethanol facility in the North East supplying its first consignment of ethanol.
Outlook: Nearby firmness is masking the vulnerability of deferred prices.
Fertiliser
At last in most areas this week we`ve had some respite from Winter, and attention is focusing on top dressing.Ground conditions are still quite wet and soil temperatures are still cold. So there is still a good opportunity to ensure fertiliser spreaders are calibrated and well maintained.No matter how good the fertiliser plan is inaccurate spreading can result in an environmental risk, along with reduced yields and lower profits.For best results spreaders should be calibrated for each fertiliser on the farm.
We work closely with Spreader & Sprayer Testing Ltd who are experts in this area. Please speak to your Farm Business Manager to arrange a test.
OSR
- Snow cover in the US may delay bean planting.
- South America contends with prospect of lower yields.
- Pound remains weak supporting values.
Nearby Matif has gained €3 to the time of writing with the domestic market gaining £4 in the same period, helped by a dramatically weaker STG. The domestic market has been searching for some direction following differing global news items. There have been a number of export sales made recently as the market has been on a par with domestic crush values.
US soybeans have had a mixed week with news flow proving positive and negative in equal measure leaving the market to be dominated by moves in the USD$. The most recent news being the lingering snow cover in the US is starting to impact on corn and soybean drilling periods and news that China has started to switch purchases from the US to South America. All eyes will be on the USDA S&D report, issued on March 10th, for the latest soybean ending stocks figure.
Crude oil markets have followed a one day up one day down pattern and have broken through the $80 a barrel (first time in two months) which added a little support. This benefit was short lived as news that the US bio diesel tax credit will not be extended was digested. The removal of this tax credit could have a knock on impact on demand for soybeans for crush into oil.
With last week`s report of heavy rains in South America meaning possible delays to the harvest we have this week seen reports concerning yield issues. With the recent storms the associated cloud cover has meant that there has been a lack of sunlight reaching the crops leading to smaller grains and ultimately impacting on yield. Brazil has also seen a slow start to soybean exports as the recent export report shows they are currently behind expectations.
Bank of England monetary policy committee met today and have left interest rates at 0.5% for the 12th consecutive month as expected. The Quantitative easing programme has also been placed on hold. STG has had a tough week this week, weakening over the first half on concerns that the UK`s own budget deficit is on a par with Greece and hence places us in a similar position. It has been a better end to the week for the currency as the CIPS index showed a healthy gain to 58.4 ahead of estimates of 55 (anything index score over 50% reflects growth) this has been the highest level since January 2007 and has proved positive for STG in trade today.
Pulses
Following the feed bean cargo concluded last week, which had supported the spot market, values have now returned to more normalised levels. With further cargo sales required to recover the momentum in the market. Spring bean values are indicated at £6-£7 premium over feed values. New crop feed values are indicated at £110-£115 dependant on location, there has been no physical trade at these levels.
The Peas market is very quiet and had been void of bids this week.
Oats
Further to last week`s report there have been some feed quality product traded at levels that translate to £60-£63 on the farm, however there have been no milling bids seen and we see that it is unlikely to change, bar some top up purchases by the mills, this season. Different story for new crop with bids basis £72 ex farm for November seen. Although STG has weakened, helping our competitiveness on the continent, any export opportunities are now further hampered by the over supply of feed products on the continent.
NABIM/Crops milling wheat challenge
The Milling Wheat Challenge, organised by nabim and Crops magazine, aims to highlight the great job professional milling wheat growers do, and spread best practice across the industry.
If you are interested in finding out more please copy and paste the following address into your browser.
http://www.fwi.co.uk/landing-page/arable/nabimchallenge/form/
Disclaimer
While the information contained herein is believed to be reliable, Openfield makes no representation as to its accuracy or completeness. Any statement non-factual in nature constitutes current opinion, which are subject to change.
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