News

It has been a mixed week in International grain markets and CBOT futures markets have been trading erratically following the President`s Day long weekend with wheat values just lower on the week. This is not the whole story however. In Thursday`s tender to supply wheat to Egypt for May shipment, US wheat was circa $40 more expensive than Russian and even French supplies. This is a clear indication of how far out of step the US wheat market currently stands. The Russian offers were at market, but local merchant were undercut by shippers. There have been no official comments from Russia about exporting their Intervention stocks. France managed to sell 60K, once again this trade was below the current market value, which will have helped push the MATIF wheat futures contract to new lows. EU export licenses taken this week are encouraging at 568K taking the season total to 12.2 mln including flour.

Outlook: Shippers clearly believe that feed grain values need to fall further.

Wheat

LIFFE wheat trades new contract lows
December export data issued
Milling wheat market subdued

It has been a torrid week for UK cereals with new contract lows on the LIFFE wheat futures being established. Ex farm feed wheat is now trading below £90 for spring collection in many areas. Exporters are still unable to make fresh sales with bulging stores in the Iberian peninsular and cheaper domestic supplies in Ireland keeping importers away from the market. Customs data showed that 169K UK wheat was exported in December taking the season total to 953k. Interestingly the data only records 1.5K of shipments outside of the EU for the campaign which appears light especially in view of the availability and quality of low grade milling wheat (UKP) this season. It may be that there is some catching up to be done in the collation of information. Imports for December nudged over 100K taking the total imports thus far to 735K which reinforces the view that the official import figure for the year looks too low. The milling wheat market has been subdued with millers once again rolling purchases forward depressing the premium for spot collection, but summer collection full specification group 1 wheat still hold a premium of £16 to £18 over feed at the point of delivery.

Outlook: Any rallies are a selling opportunity.

Oilseed Rape

Presidents` Day holiday in US sets tone for the week
China economic policy ripples through markets
Government borrowing news sends STG weaker

Nearby Matif has gained €4 to the time of writing with the domestic market reflecting £6 gain in the same period. A lacklustre start to the week following the US Presidents`Day holiday on Monday has been helped by a sharply weaker STG on the day following news that the Government had to borrow in January; the first time in 20years. Domestic crushers have remained largely on the sidelines as the firmer USD$ had eased crude and soybeans levels.

NOPA (National Oilseeds Processing Association) soybean crush report issued this week showed a slightly above average crush number for January, bringing the total crush for the first five months of the marketing year to an estimated 789.5Mn bushels vs. 706.9Mn bushels a year ago.

Other main stories this week have been the credit tightening in China. The government announced an increase in bank reserves, effectively removing money out of the economy. The impact of the measure was felt across all markets as fears for global growth were resurrected and markets eased back, including shipping, soybeans and crude oil. We have also seen in the news that the US has dropped a bio diesel tax credit from a recent jobs bill. This removes a $1 a gallon credit to producers in the US which they argue is needed to maintain production the fallout of which could prove positive for European bio diesel origination.

The USDA is expected to issue its first 2010/11 balance sheet estimates on Friday. The trade is anticipating soybean plantings to be pegged at 77.5-78.5Mn acres and a slight increase in the carry over number reported earlier in the month at 210Mn bushels.

News that the UK government had to borrow in January, a month usually in surplus due to tax receipts, has sent STG weaker on the day as concern over the health of the UK economy returns, up until that point the Greek debt situation had dominated currency news. As reported last week it was expected that greater detail on a potential bailout would be made available at the EU finance ministers this week, however no detail was forthcoming which had led to further capital flows out of the single currency and into the USD$.

Malting Barley

We have seen some reports this week containing estimates for spring plantings across the whole of Europe. These reports have not yet yielded any surprises: as expected they see a drop in spring barley area across the UK, France and German and as yet there has been no reaction in the market place. Premiums over feed values remain narrow and export opportunities remain lacking as the industry contends with oversupply issues and lack of demand.

Oats

No bids for milling quality oats seen at all this week. We have seen some feed enquiries and these have traded at an ex farm equivalent of £60 per tonne. In a similar fashion to beans we have seen some export enquiries but these have not translated into trade. New crop values have been indicated at £72 ex farm, dependant on location.

Pulses

Beans, market continues to drift lower amid some limited buying interest for spot month positions, with values of £133 ex farm being indicated. Market has been void of bids for spring beans this week and whilst we have seen some export enquiries, these have not materialised into firm buyers. It has been over a month now since we have seen any new crop bids for either feed or human consumption produce. Peas, there has been some interest in old crop peas for micronizing and these are seen trading with a small premium. Our buyback offerings are now completed.

Seed

More activity has been seen this week as the calendar if not the weather makes people think of spring sowing.

Spring barley certification figures published earlier this week show a 60% decline in certified spring barley production compared with the same time last year, although there has been a flurry of sales this week with Tipple and Quench in demand in the south and Concerto in the north and Scotland. Openfield are currently holding stocks of all three for prompt delivery.

We are currently processing Abacus Linseed and Ability Oilseed rape seed for those who are not in malting areas or want to diversify their spring cropping.

Buy backs are still available on Linseed.

Large Blue peas for the micronising market are still available , but spring beans are sold out everywhere.

The new Openfield Grass seed and Game cover booklets are available from the seed offices or as downloads from our website www.openfield.co.uk. Similarly the Pioneer Maize booklet can be downloaded, details of our other maize selections are available in the forage section.

Fertiliser

The main news this week in the fertiliser market is the announcement by Yara International ASA to a cash merger (purchase) of Terra Industries. The impact being that the UK based fertiliser manufacturer GrowHow is currently a joint venture between Yara and Terra. This ends a long period of speculation as to the ownership of the US based Nitrogen manufacturer Terra. (Yara have been successful where two other US based organisations have failed) Yara is a European based business where the UK fits into an established structure as being an important market and customer base

There is also a commitment to Research and Development to help British growers to manage crops efficiently and profitably.

The danger of a US based organisation taking control could have been a lack of focus or investment in the UK infrastructure.

Markets will remain competitive in the UK, global factors will dictate price and alternative products will still feature.

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.