News

Last week`s USDA supply and demand was largely neutral for wheat. Production has been increased to 663 mln which with a modest increase in usage give a forecast ending stocks of 186 mln or a little over three months use. Corn ending stocks are forecast to reduce by 3 mln mt, a reduction of 5 mln mt from last year. This forecast relies on production achieving a record of 794 mln mt. With each 1% gain or loss on US predicted yield equaling 3 mln mt as harvest progresses things can change quickly. It was for this reason that when an early frost was predicted this week the row crops rallied strongly, only to fail when temperatures improved. Wheat markets were caught up in the volatility and this prompted Egypt to hold a tender for October shipment at which they bought 240K of Russian wheat. Algeria had issued a tender to buy domestic wheat, but in the end they bought 300k imported, some of which is likely to be supplied from France. Outlook: Attention will now shift to row crop harvesting and planting of winter cereals in the Northern hemisphere. With a record fund short in CBOT wheat the market could be trying to form a base as values reach 2007 levels.

Wheat

Volatile trading conditions
DEFRA revise planted area
July09 UK wheat exports

Cereal trading has been a volatile affair. Initially the recent lower trend continued but weaker Sterling against the Euro sparked a short covering rally. This rally was then given further impetus when the DEFRA June area survey results were issued for England. The headline reduction of the wheat area by 13% brought more buyers to the market. While this is a significant change the UK will still have an exportable surplus of wheat and the reality is that even with weaker sterling UK wheat is still too expensive in the EU feed matrix. Customs data issued midweek showed that 165K of wheat was exported in July comfortably beating last year`s 90K. Imports stood at 152K which is also higher than July 2008: Outlook: We may have a smaller surplus to deal with and undoubtedly quality is favorable. However until the domestic premium is eroded it is academic!

Oilseed Rape

A volatile week that has been masked by the fact that at the time of writing nearby Matif has given back just a €1, with the domestic market gaining £4 thanks to a significantly weaker STG. Domestically we have seen the market trade within an £8 range and has latterly benefitted from weakening STG and a narrowing of the spread between the spot market and the further forwards. Main drivers have been statements from the Bank of England Governor Mervyn King, weather models in the US and a small trade spat between the United States and China. The Bank of England warned this week that it would reduce the interest paid on commercial bank deposits held at the Bank, leading analysts to view the move as quantitative easing by the back door, forcing banks to pump more money into the market via loans etc to improve returns rather than hoarding cash, a rise in jobless numbers to 2.7Mn in August did not help the economic picture either. This concerned investors enough to see them sell STG for other currencies. Weather models earlier in the week suggested a cold snap in the US, news which spooked the market prompting a limit up gain in the US following a round of short position covering and bolstering the Matif market on the day, lifting UK prices. Unfortunately the bullish sentiment was short lived as the following day weather models forecast temperatures that rose above freezing prompting the market to give back some of the previous day`s gains. We have also seen a trade spat develop between the US and China, following President Obama`s introduction of a 35% import tax on Chinese tyres, China issued a statement saying it would review US poultry products and auto parts imports into the country. This news was enough to cause a retreat in US soybean prices as fears grew that this dispute could spill over into Soybean demand; China accounts for circa 50% of US soybean exports. We have also seen reports from Argentina that suggests in a bid to replace the government revenue lost by the cut in corn and wheat export taxes, additional port levies and property taxes will be introduced, a move that will undoubtedly impact on Soybean farmers and could lead to further protests and marketing strikes.

Malting Barley

EU markets have remained stable over the last week. Consumer buying seems to be a thing of the past. In reality those same consumers are more likely to be resellers of forward contracts whilst bottlenecks within malt off-take programmes will undoubtedly impact Q4 delivery schedules in most countries.

Premiums have declined to sub £5 per tonne for export grades with the direct comparison to intervention feed more likely to be nearer £2 to £3 premium. There are limits to how much further this premium can be squeezed for crop 09, but crop 2010 still has potential to devalue whilst the trade sells the spread between crop years in anticipation of another season producing an extremely high EU carry-out.

Pulses

Beans have been supported latterly this week in line with gains made in the wheat market. There has been some export interest shown for both feed and premium samples. Egyptian homes present the best opportunity for extracting premiums on Wizards, we are currently waiting for buyers to return to the market following business concluded late last month, with this in mind bids have been hard to come by. There has been some surprise at the area that DEFRA reported for bean acreage this year which came in above trade estimates. Peas, good quality blues are well supported; however bleached samples are proving difficult to find homes for. The Marrowfat market remains well supported.

Oats

Furious drilling activity this week has stretched transport and production capability to the limits and it is still only the 3rd week of September!! Thank you for your orders so far.

Openfield still have some attractively priced marketing agreements for those that are considering what to order next. Milling contracts for Burnham ( new ) Cordiale, Gallant, Hereward, Solstice, group 1/2 milling. For the feed producer who wants to have more marketing options Group 3 export contracts for Claire ( limited) and Scout.

If you are considering what to plant later , or instead of spring barley Openfield have good premiums on Zircon and Paragon spring wheat ( we also require seed growers for both).

Please speak to your local Farm Business Manager for details of the above.

Seed

Market is moribund. Feed quality homes remain scarce at present and there is no export market as we cannot compete with European prices, although the weakening of STG over the latter stages of the week could lend some support. Domestic mills are content to use contract oats as a fall back to fill in where open market oats are not forthcoming. It is unlikely that UK mills will increase prices in the short term unless the export market presents a viable alternative for growers.

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.