News

A threat of frost to the late maturing row crops in the US sparked a short covering rally across the globe. Although there are ample supplies of wheat in the world the world corn supply and demand is tight and current forecast is showing a reduction in ending stocks. If corn yields fall short then wheat will start to be used for feeding thereby reducing wheat supplies, which has been a signal for index funds to start buying back their short positions. In the EU this rally was given extra impetus in the EU when it was discovered that the French wheat area had been over estimated and the crop is likely to be 1 mln mt lower. This still leaves the French with the biggest surplus in the EU by far and exports from the EU are starting to slow. After this weeks wheat award of 395K it take the total for the crop year to a tad over 5 mln compared with 6 mln at the same point last year. There have been more wire reports regarding Russian intervention purchasing which is now expected within weeks. Black Sea trading continues to be active with sales to the Far East and a rumor that Iraq bought some shipments in addition the 200k of US supplies. Outlook: There is a USDA report imminent and this along with the harvest weather and the output of the row crops will be the market drivers.

Wheat

Grain sees short covering rally
DEFRA issue crop estimates
Milling premiums slip.

It has been a choppy few days for UK cereals, a combination of sterling`s gyrations and a rally in world cereals has spooked shorts back into the market. Values have edged to £100 ex for feed wheat for summer collection in most areas, a level at which many farmers have made some sales.

It remains unclear if farmer cash flow will force sales prior to Christmas. DEFRA has issued its provisional UK crop estimates calculating wheat production at 14.2 mln mt and barley at 6.7 mln mt. This higher barley production is due to a higher area rather than yield, but it does imply an exportable surplus of close to 1.5 mln mt. The first official supply and demand is not available until 4th November but in the current market, placing 1.5 mln mt of barley will be a challenge and intervention sales may well prove to be the best option. As feed wheat prices advanced milling premiums came under pressure in slow trade. Outlook: The market feels uncomfortable and is looking for direction, while wheat and barley exports remain difficult.

Oilseed Rape

Nearby Matif has gained €4 so far this week with the domestic market gaining £3 in the same period. As has been the case on a number of occasions the weekly move to date does not reflect the volatility in the market. Main drivers of volatility this week have been the weather and currency, the markets. STG was driven weaker at the beginning of the week following some poor industrial production numbers and has been clawing back lost ground since. This helped support domestic values which then received a further boost following weather news centred on the frost event forecast for the US this weekend. This news prompted speculative buying and short covering on US soybean contracts further adding to gains for the domestic market as Matif moved higher inline. With the move higher we have seen growers return to the market place and this selling pressure has tempered further gains. Any further delays in the harvest will support near term cash prices as while a bumper crop is expected getting physical beans into usage channels has proved difficult due to the delays experienced so far on the back of the poor wet weather. Market has retreated a little on the back of a firmer STG since. On a global level we have seen further increases in estimates (A.B.I.O.V.E) for the South American soybean crop with Brazil in particular seeing a further 2Mn tonnes of production up to 64Mn tonnes. USDA report issued today reflects small gains in production numbers and stock levels for Soybeans, 3.250Bn bushels production and a 230Mn bushel carryout for 2010, increases of 5Mn and 10Mn bushels respectively. The report also contained estimates for the EU-27 harvest, this was increased by 0.6Mn tonnes to 20.6Mn tonnes with an increase in carryout stocks too. These numbers have not really impacted on the market at the time of writing. DEFRA issued its UK provisional 2009 production forecast yesterday pencilling in a total of 1.9Mn tonnes for Oilseed rape, inline with most industry estimates and therefore having little impact on the market. Final figures will be released in January. Bank of England has kept the base rate at 0.5% and has maintained the quantitative easing programme at £175Bn forecasting a probable end of the programme next month. We are also awaiting data due out later this month that could show that the UK has exited recession, a position that should be bullish for STG.

Seed

The recent rain and the diminishing price for malting barley has re-started interest in winter wheat and beans.

Cordiale and X1-19 proving popular with buy backs available and Humber and Viscount as feed types. Zircon and Paragon premium spring / alternative types are selling well and will be sold out before Christmas at the current rate of progress, so please register an interest early!

Openfield have floor stocks of most wheat and barley varieties and are able to dress to order with Deter and Austral Plus.

The English seed market has received an unexpected boost with demand for seed coming from Ireland as Irish seed quality has been lost in the wet harvest.

Lorry loads of high yielding feed types and group 2 milling are departing on ferries and there may also be a demand for spring seed.

Beet and potato lifting has begun in earnest now that the land is has softened and the maize crop will soon be harvested so wheat drilling could continue for at least another month.

Fertiliser

Fertiliser prices could be set for rises in 2010, as gas prices firm and worldwide demand picks up again.

Addressing the HGCA market outlook conference in London this week, industry consultant Marina Simonova said there were many market drivers at play, but the price of natural gas accounted for up to 70% of the cost of ammonium production.

Normally the price of gas tracked the price of oil closely, though there was currently some `disconnect` with Brent crude oil having risen from $40/barrel to $70/barrel this year, while gas prices had slipped further. British Sulphur Consultants suggest a recovery of gas prices into 2010, supported by the improved economic outlook. `As gas represents a significant component, fertiliser prices are expected to move upwards in 2010, driven also by improved demand, inventory destocking and industry rationalisation,` she said.

Pulses

Beans, market has been static this week in the face of a rising wheat market. With no new export business for either feed or human consumption grades seen this week and new domestic bids lacking, the only homes at present remain the uptake of product by shorts. Spring premiums are seen at £10 over feed with wizard demand satisfied in the short term. We are seeing levels at £120 ex farm for the New Year, dependant on location. Peas, market unchanged on the week. Second tier blues (10% bleached) remain difficult to market however bids are still seen between £160-£165 dependant on location. Growers with quality samples of blue or marrowfat peas are encouraged to contact your Openfield buyer.

Oats

Better news this week as we have seen a break in the deadlock in the market place. We have seen enquiries for feed quality oats for New Year movement following on from a dwindling of feed home stocks. We have also seen an interest for milling quality which could be of benefit in the New Year for growers in the West and Midlands. Export remains at a standstill with a lack of competitive opportunities.

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.