News

The commodity gains of the previous week were lost as the US dollar regained some poise. Grain markets have been ignoring fundamentals as a period of capital flows pulls all commodities to and fro while fund managers struggle to understand the dynamics of the world economy. Harvesting of corn in the US is the slowest for 30 years, as cold wet weather hampers farmers and this is affecting the planting of the winter wheat crop. These are just two factors that the market is currently ignoring. Physical trade has been routine; Iraq has purchased 300K of Russian, Australian and US wheat for shipment in the spring. The IGC in its monthly world supply and demand notice increased world production by 1 mln mt and corn by 4 mln mt. The EU export programme is now well behind last year with a little over 6 mln being exported against 8.4 mln at the same point last year. If the EU is to avoid intervention for wheat then it needs to either find more niche homes or get cheaper. Outlook: Continued volatility.

Wheat

Grain markets crash
Sterling firm
Milling premiums hold

There is an old Chinese curse `may you live in interesting times` and it certainly feels like that in cereal markets. At the end of last week there was a sharp rally in grains and ex farm feed wheat reached £100 ex for pre Christmas collection.... briefly! Many producers missed out on a selling opportunity by changing their aspirations only to see values crash through the course of the next few days to the point where £100 ex is only available for summer collection. A recovery in both the US dollar and sterling combined with a general commodity sell off was the catalyst. There have been a few export cargoes sold back to UK shippers this week especially for later in the season where UK feed wheat look expensive in the EU feed grain matrix. Nearby shipments are continuing as UK supplies remain competitive. UKP and UKS enquiries continue as do shipments. Milling premiums are unchanged pre Christmas and have edged higher to £20 to £22 over feed at the point of delivery for summer delivery. Barley trading is slow; and is just below intervention parity as we enter the first week where offers are possible. Outlook: Continued volatility....

Oilseed Rape

Relatively quiet week this week in terms of volume as most of the trade is off for the half term break. For those in the market it has been a week of weather and currency, two topics that have been a close companion of our domestic market for some time. Nearby Matif has given back €4 thus far and is now trading on a technical basis as the contract rolls off at the end of the week. Domestically we have seen prices retreat and currently trade off of lows at £5.00 down, it had traded as low as £7 lower up to Thursday morning. STG has been a key reason for the weakness in the domestic value having firmed up from £/€1.082 to £/€1.113 at the time of writing thus returning to levels seen prior to last week`s sell off. Drivers for the recent strength being the increase in mortgage approvals over the last month and some weaker consumer confidence numbers from Germany, reflecting that a tight economic situation remains for the Euroland. External markets have seen another volatile week with both weather and currency issues figuring in the US. Wet weather in the US last week supported soybeans; this week news that dry weather had been forecast on the long range radar removed the premium that had built up. This weaker sentiment was further compounded by a firmer USD$ which had gained on the back of weak US consumer confidence figures which had prompted investors to return to the perceived safe haven USD$. Crude oil also suffered giving back 2.6% on Wednesday alone, firmer USD$ and jump in gasoline stocks removing support. Earlier rumours that China had all but concluded soybean imports for the marketing year proved unfounded when new cargo sales for the new year were announced two days later. South America has seen soybean planting continue a pace with Brazil focusing on early maturing varieties to aid in getting beans to market. Bank of England monetary policy committee meet next week with focus being on any announcement on any change to the quantitative easing programme, following last weeks shock GDP figures it is anticipated that an increase to the programme will be announced.

Seed

Winter wheat sales continue in most areas with Cordiale, Einstein, Grafton and Oakley the main varieties in demand. We still have stocks of these and other varieties with a choice of dressings available for prompt dispatch.

For those who may need to plant in the spring Zircon remains first choice for our breakfast cereal market and can be drilled through to March.

There is considerable interest in Linseed again with the recent surge in the product price and Human Consumption Pea contracts are becoming scarce as growers move out of spring barley.

Malting Barley

Malting markets have eased back during the week with French markets losing €6 on crop 2010. Although a weaker tone has crept into the market, the fact that sellers did not materialise at higher levels does not give comfort to trade shorts. Old crop continues to be constrained buy a lack of demand in all positions.

Fertiliser

Following on from last week`s theme of GrowHow NPK grades this week we are focusing on Heartland Sulphur 24N 8P 8K + 8SO3, as all GrowHow NPKs a true granular compound, but in addition one which is flexible in its applications for cereals, oilseed rape and grassland. Heartland Sulphur reduces autumn workload and fertiliser application costs by moving Phosphate and Potash to the Spring. One product throughout the season simplifies operations and decreases workload at peak times. For details on the full range of GrowHow Granular Compounds please speak to your Farm Business Manager. Next week look out for some exciting news on the celebration of 45 years of Nitram production.

Pulses

Beans, prices remain supported purely by shorts in the face a retreating wheat market. With these shorts concentrated in the spot position fulfillment of their requirement will see a correction in pricing levels in the short term. We are seeing continued interest for Spring and dependent on location premiums are between £8 and £12. Wizards have been trading as feed although we have opportunities on a very tight spec to realise a small premium, again dependent on location. Peas, green pea consumers have widened the threshold for bleached levels and samples falling into this requirement are commanding a £40 premium.

Oats

Oats, market is now trading at lower levels with pre Christmas movement now very limited. Recent discussions within the trade are suggesting that consumers have completed the vast majority of their marketing year requirement leaving approximately 25% to fulfill. STG`s recent rally has not helped export opportunities and these ideas are now firmly on the back burner.

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.