News

As we enter the New Year grain markets are in torpor awaiting the much anticipated return of fund managers rebalancing their portfolios. This apparently involves them reducing their exposure to the best performing sectors in 2009 and replacing with those commodities where they see greater upside potential. This obviously is not supported by the fundamentals of the wheat market but traders are unwilling to make any major moves until the rebalancing process has run its course.

The latest USDA report is out on the 12/01/10 and it will be interesting to see how they account for the 500 mln bushels (12.7 mln mt) of US corn that remains in the fields. Corn is the market that should fundamentally find underlying support given the increase in usage for ethanol which could increase further if plans to increase the blending mandate for ethanol from 10% to 15% get rubber stamped and will likely mean corn will need to find additional acres in 2010/11. The anticipated 2 mln acre reduction in the US wheat area should not cause too much concern given that US exports are running 26% behind last year`s levels and are currently uncompetitive on the World market. Little wonder that traders look on quizzically as Fund managers force US wheat prices higher despite overwhelming evidence that they should be doing the opposite. If `Fund rebalancing` fails to materialise in any volume the market could quickly go into reverse.

UK wheat markets enjoyed a price hike in the run up to Christmas as consumers took some cover in a thinly offered market perhaps also fearing the Funds influence in the New Year. Prices have since retraced as growers took advantage of the rise upon their return to work. UK wheat remains competitively priced for export, being currently cheaper than Black Sea and Brazilian feed wheat into the EU although we need to remain competitive against Danish and French wheat in order to dispose of the surplus.

Feel that any Fund related strength remains a selling opportunity in the short term particularly with reports that the 2010/11 Global wheat crop is currently looking in good shape.

*Late News*US unemployment number higher than expected causing US dollar to weaken and could support US markets on the opening today.

Oilseed Rape

Market had begun the week on a positive footing and had been trading £5 firmer, this positive sentiment has been reversed and we are now back to where we started the week. Nearby matif has given back a €1 with the domestic market retreating the same over the period. Markets have had a number of factors affecting them this week, with weather figuring highly albeit in an indirect capacity. Whilst domestically snow and ice has hampered physical movement from farm it is the weather globally, particularly a cold snap in the US which prompted gains in crude oil values in turn spurring gains in the vegetable oil values. There had also been some support from ideas that with deep snow cover across much of Europe and the US would spur demand for feed rations helping both rapeseed and soymeal. Soybeans had proved supported the market at the beginning of the week with China continuing to make further purchases and with recent export inspections towards the upper end of analysts` estimates. The second half of the week has had a decidedly more bearish tone not helped by the statement issued by the Chinese concerning the introduction of import permits for Soybeans, rapeseed, soybean meal and pork products with the inevitable knock on impact on import demand for these commodities. There was also a rumour that a further 1Mn tonnes of China stock Soybeans would be coming to the market. We have also seen revised crop production estimates from both Argentina and Brazil. Argentinean weather has improved prospects for the crop and production estimates are being revised upwards. Early harvest results from Brazil point to healthy yields and CONAB have increased their production estimate to 65.2Mn tonnes from 64.6Mn in December. STG has helped a little this week weakening over the course with concerns some weaker economic data and concerns over the current budget deficit and how this or the next government will address this. The fact this is an election has only added to concern over the issue. The Bank of England MPC meeting today resolved to keep interest rates on hold at 0.5%, a widely anticipated move. We will await the minutes with interest to see what comments were made regarding the quantitative easing programme.

Malting Barley

Market remains moribund with little or no new business being done as demand from all quarters remains subdued for both old and new crop. European market place remains quiet with trading houses and cooperatives not returning to full strength from the holiday season until next week. Globally, recent reports of poor quality produce in both South America and Australia suggest there may be some import demand for those countries. South America could be a useful pull of product from Europe should the € remain weaker against the USD$.

Seed

The New Year has brought a renewed interest in spring seed with strong demand for Tipple at the expense of all other varieties. Growers with large acreages to plant should consider Quench to spread harvest date as it has a yield advantage and is now fully approved for malting. Openfield also have a limited amount of Concerto for evaluation. Concerto has the attraction of being suitable for both brewing and distilling, buy backs are available.

Peas Linseed beans and spring rape are all being booked in good volumes as growers lock into the attractive buy backs while they are still available. Supplies of spring wheat are now getting very tight although Openfield still have Zircon premium contracts to place and we would still like to place more seed crops of Zircon and Paragon wheat.

Although it may seem a little early with snow still on the ground we have this week launched the Openfield maize portfolio for 2010. Details from your Farm Business Manager or UAP agronomist.

Fertiliser

With weather conditions as they are, soil sampling seems the last thing to think about today. However Spring N Management will need some careful managing this year. Oilseed Rape crops in particular are going to be particularly challenging. A very forward crop entering the winter will have taken up more than expected mineral N, we now wait to see how these crops look when the snow eventually disappears. What will be important is knowing exactly what the Soil Mineral Nitrogen status is to ensure accurate applications this Spring. GrowHow N-Min (r) is a unique service which not only measures Soil Mineral N but also measures the additionally available N to give a total measurement of what will be available to the crop during the growing season. These details are fed into the GrowHow N-Calc (r) and a recommendation is produced. To book an N-Min test please speak to your local Farm Business Manager or your local office for details.

Pulses

Beans, prices remain static following the Christmas period. This week has seen a little export interest for feed quality whilst we have heard that business has been done for Spring containers however these have been originated from Australia, a move which could pose issues from a European demand point of view further down the line should more business be conducted. Peas, market also remains static although we have seen strong interest in new crop buyback deals, please speak with your Openfield buyer for further information.

Oats

Oats, market values remain uninspiring with small volumes being done by the trade to guarantee movement slots which are filling fast. There is nil export interest currently and this is likely to remain the case unless there is a significant move in €/£ making us competitive against other European offerings. New crop demand remains nil.

Other Information

We will be at Lamma Show 20-21st January at Newark and Notts Showground, Winthorpe, Newark, NG24 2NY. Details: Stand No. 906, Hall No. 9.

We are currently holding Member Meetings accross the country.Take a look at the diary page for a meeting local to you.

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.