News

US grain/oilseed markets continue their decline
US wheat stocks at 22 year highs
President Obama`s comments curtail banks activity in markets
IGC forecast Global 2010 wheat production down 21 mln (-3.1%) at 653 mln
Argentine wheat area forecast lower for 2010/11
Egypt buys Russian wheat at tender
EU awards 359k export licences at weekly tender (cumulative 11.1 mln down 22% on last season)

Markets declined again this week, taking prices down £10 since the turn of the year following a raft of negative news which has laid the burden of proof squarely at the feet of beleaguered bulls. President Obama`s call for new restrictions on banks and other financial institutions, to rein in excessive risk taking and to protect taxpayers has curtailed fund activity in commodity markets whilst the uncertainty prevails.

China have also tightened their credit policy which is seen as potentially reducing demand from one of the few economies in the World that continues to grow. The lack of any real or perceived weather problems anywhere thus far does not argue for a major reduction in global wheat stocks, whilst dollar and sterling strength has also weighed on sentiment. Fund positions are losing money and there is a fear that they may `chuck in the towel` which could cause further price weakness.

Reports emanating from South America suggest that corn and soybean crops in Brazil and Argentina could exceed expectations. Although there are suggestions that wheat plantings in Argentina could be well down which is surprising when you consider that this season`s plantings were the lowest in 100 years.

Looking forward it is still conceivable that there could be a weather market with some forecasters predicting a long hot summer ahead. US winter wheat plantings are down 12% although with US stocks at 22 year highs this should not be a problem. The International Grains Council forecast the Global wheat area down 1%, estimating production at 653 mln tonnes, down 21 mln (-3.1%) from this year on lower yields.

The global corn situation needs close monitoring with stocks to use ratio at a tenuous 17%. This season`s record US crop could be revised lower in coming reports as 5% remained in the fields following the late harvest. It is anticipated that US corn acres will increase this spring partly replacing unplanted winter wheat acres. On a positive note US ethanol production was a record in November 2009 which implies the sector remains profitable and with the potential increase in the US ethanol blending mandate, corn usage will likely continue to grow.

The recent hike in sugar prices due to global supply concerns has also reduced ethanol production in Brazil who had been a major exporter, and there have even been recent reports of US ethanol exports to Brazil. Chinese corn production is also believed to be 10-15 mln tonnes overestimated so there is still scope for the global corn S&D to tighten further.

Price action from here on in will remain choppy and will trade sensitive to weather, currency and geopolitical issues although sentiment has definitely turned negative. There is however a long way to go and markets are oversold and susceptible to a bounce on any positive news.

Seed

Spring barley continues to move with Tipple still outstripping the other varieties in the South and Concerto selling well in areas with access to the distillers.

Spring wheat is now very scarce but if the land destined for the crop has anything other than wheat as a back cropping, Openfield are still looking for seed acreage of Zircon and Paragon at attractive premiums.

Linseed continues to offer an attractive alternative as a spring break, as do Large Blue Peas for micronising.

Openfield`s Maize portfolio is now listed on the seed section of the website, listing varieties suitable for Forage, Grain or Biogass generation. Early order discounts and free soil samples are available for orders of key varieties booked before the end of Feb.

Fertiliser

The fertiliser market has suddenly entered a different phase. Cost prices for most nutrients are now starting to rise very quickly. The reason for this is a recovery in demand for all fertilisers. This is having an impact because of the way most producers reduced their production levels following the market crash just over a year ago. This left them with stocks at record levels with few sales, even at the much reduced market price. So over time these stocks have been eventually sold and demand has slowly but surely recovered. With usage period very close, the market has turned the corner where demand outstrips supply.

Pulses

Feed beans have seen a fall of £2 per tonne this week, as shorts are filled and export opportunities are hindered by currency. Most of February is now sorted and March homes are getting filled.

Spring bean premiums have eroded over the last few weeks to around £5 per tonne, although very hard to sell, as fresh sales to the Middle East are non-existent, and therefore not trading. The buyers will be back sometime soon to buy for later and hopefully a bigger premium will be seen. Blues peas are now being taken up as micronisers buy to fulfil their requirements with decent premiums over feed being paid for the more bleached samples. Good Marrowfats are still required if samples can be seen.

Oats

Still the same problems as Oats remain on farm due to low prices not being acceptable to growers, quality issues and limited homes to take them. This could mean another roll into next year.

Some small amounts of export feed oats are happening on the South coast and it is hoped more tonnage can be sold but again prices are very low.

Contracts for 2010 Harvest are long gone and millers are reticent to give anymore at the moment.

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.