News

Currency movements particularly the weakness of the US dollar and sterling lent solid underlying support to grain/oilseed markets as funds continued to invest in commodities despite negative fundamentals. However news overnight that Dubai World, a government investment company, had asked creditors if it could postpone forthcoming payments for 6 months until may, prompting fears of a potential default, sent shock waves through global stock markets. Money flowed back initially into the dollar which has seen US grain and oilseed prices weaken overnight following the Thanksgiving holiday. Sterling remains weak on speculation as to the extent of the UK banking industries exposure to the Dubai debt. This once again demonstrates that markets are vulnerable to negative news albeit non grain related which can change sentiment overnight.

The International Grains Council increased Global wheat production in its report by 1 mln mt to 668 mln, whilst forecasting the 2010 wheat area 0.7% lower although still 2% above the 5 year average. Given normal growing conditions this could add 20 mln mt to Global wheat stocks which cannot be bullish.

UK prices are little changed on the week although had been £2.00 higher at one point. Export demand for UK feed wheat appears scarce particularly with barley trading at £15 discount into Southern EU destinations, although some interest still exists for UKS and UKP. There have been reports of defaults on Black Sea feed wheat contracts due to the $50 increase in prices which could mean that buyers may need to look elsewhere to cover their commitments. There has been some demand domestically into the starch and ethanol plants in the North West and North East for both old and new crop which has attracted other consumer buyers into the market. Sellers have been reluctant to buck the trend amid much talk of a `commodity bubble` although all as we all know all bubbles eventually burst.

Oilseed Rape

Matif has lost €1.50 over the course of the week with the domestic market remaining static following a weakening of STG. Early part of the week saw some decent volumes traded as the market was supported by positive sentiment following the better finish to overseas market late on the previous Friday. Markets subsequently retreated but staggered back to touch Monday`s highs again on Thursday. Late on yesterday and today has seen a complete reversal following an announcement yesterday about Dubai World and its request to delay debt payments. The announcement has had a big impact on global markets with a investors seeking a safe haven in the USD$ partly leading to the weakness in STG. US soybean markets have been buoyed by recent reports showing that usage was above previous expectations and larger than expected export figures. One report showed that in the first 11 weeks of the US marketing campaign some 27Mn tonnes of soyabeans have already been sold for shipment throughout the year, out of an exportable surplus of 36Mn tonnes (75% of total) this also compares to last year`s figure at the same point of 11Mn tonnes. We are expecting little in the way of trade to round out the week as the US is closed Thursday for Thanksgiving suggesting that many participants will have squared off positions ahead of the holiday and taking a long weekend. Concern is growing over the South American soy situation. Following last week`s news that production estimates have been reduced by 4Mn tonnes and with this weeks usage and export numbers, analysts are now looking again at the global S&D picture to assess what impact further falls in production will mean. We will have to wait until the 10th December for the next Bank of England MPC meeting on interest rates. No change in base rate is expected but given last month`s voting pattern, comments will be closely watched.

Malting Barley

World

Barley harvest almost over in the northern hemisphere

The barley harvest comes to a close in the northern hemisphere. About 10 % of the barley acres in Canada and in Russia must still be combined. Overall results were good, quality (protein) and condition problems were rare. The U.S. reports a crop of 4.95 mt (last year 5.2 m) thanks to an average yield of 72.8 bushels per acre (3.9 t /ha), which is 15 -20% higher than in the past two years. The Canadian crop will be 9.1 mt including 2.mt of malting barley. Private estimates put domestic needs at 800,000 t, exports to the U.S. and off-shore at 800,000t -1,000,000t. Russia`s crop is estimated at 18.4 mt vs. 24 mln in 2008, the Ukrainian crop at 11.4 vs. 12 mt. Yields in both countries were sharply lower than in 2008, but in Ukraine acreage was up by 15%.

UK

UK Malting Barley Committee held its autumn 2009 meeting to discuss the progress of new varieties within the testing system. The outcome was the removal of Cocktail from the approved list for brewing and distilling.

The updated IBD Approved List for Harvest 2010, incorporating the changes described above, is as follows:

Brewing use winter varieties with full approval: Pearl, Flagon, Cassata; Spring varieties with full approval: Optic, NFC Tipple, Westminster, Quench; Spring varieties with provisional approval 1: Concerto.

Malt distilling use winter varieties with full approval: none; Spring varieties with full approval: Optic, Oxbridge, Publican, Belgravia; Spring varieties with provisional approval 1: Concerto, Forensic.

Grain distilling use Winter varieties with full approval: none; Spring varieties with full approval: Decanter, Belgravia; Spring varieties with provisional approval 1: Forensic.

Oats

Oats, market remains very thin, as reported last week trade is being conducted but at these lower levels. Movement opportunities are now realistically February onwards with pre Christmas completely covered. Export opportunities remain scarce and with recent currency volatility this is likely to remain.

Pulses

Beans, have had a good trading week as people fill remaining homes before Christmas. Prices remain relatively firm as shorts try to cover in sales. Outside of this we still see it likely that prices will begin to ease back as is usually the case going into the break. Human consumption beans have traded this week with premiums stretching between £9-£11 dependent on location. Pea markets remain for bleached samples with values between £140 ex to £170 ex depending on % bleached and of course location.

Fertiliser

The Urea market has firmed quite rapidly over the last week. This is due to US and India buying huge quantities, this has changed the supply demand balance. The outcome being that Nitram now more than ever represents superb value for money. This gives growers a fantastic opportunity pre Christmas to lock into any balances as Nitram before the market moves into a different mind-set in the new year. With estimates suggesting the nitrogen market could be 300-400,000 tonnes up on last year, our own supply demand balance could be altered as we head towards Spring. Don`t forget the Nitram Prize Draw, for more details call 01476 862730.

Seed

The deluge of the last week has slowed demand for winter cereals, this being replaced by significant interest in spring barley, big tonnages being traded as the major players finalise their cropping decisions. Tipple and Quench supplies are adequate , but availability of Concerto the new barley which has brewing and distilling markets will be limited.

Zircon spring wheat remains first choice for our breakfast cereal market and can be drilled through to March. Paragon is also available with a buy-back contract please contact your Openfield or UAP business manager.

The Linseed market remains firm but rumours of 3 cargoes of Canadian linseed being loaded for shipment to Europe suggests it might be wise to book your buybacks soon. The variety Altess with a good combination of yield earliness and oil profile is our recommendation. Human Consumption

Pea contracts are becoming scare but Openfield do have an area of Kahuna still to place with a headline contract price of £260 / tonne.

Seed growers are required for speciality wheat variety Burnham for the Warburtons contract and Heraldo and Zircon white wheat for the breakfast cereal market.

Burnham and Heraldo are winter types. Good premiums paid, please contact your local Openfield or UAP business manager.

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.