News

Physical grain trading has been slow as futures markets have endured an erratic week, finishing broadly unchanged. The row crops have been the main driver as the weather hampers Soya harvesting in South America. The `logic` of the market is such that this has been extrapolated out to US corn planting in the spring (although the field conditions are likely to be more important) and subsequently the potential effect on wheat demand. The gyrations of the US dollar have added to the mix.

Intra EU trading is much the same as it has been for the last few weeks. Reluctant consumers with full stores added to which maritime freight levels are increasing. One interesting snippet was a request from Finland for the commission to reinstate export refunds for barley. The request was prompted by a lack of storage space to accept offers of intervention barley. The request was rejected by the new EU farm commissioner stating that he did not want to depress World barley values. However the commission is considering a transport subsidy to store the barley in another EU state (this has happened in the past). This is a good example of how political decisions can affect market fundamentals. Outlook: continued volatility.

Wheat

Grain markets slow

The end of February marks the half way point of the UK cereal marketing year and prices are knocking on contract lows. A combination of lower domestic usage (ethanol), higher imports and slow exports has made the UK wheat market feel heavy at a time when the inter EU feed grain matrix is very competitive.

Ex farm feed wheat levels are currently £86 to £88 for spring collection and £89 to £91 for summer. Group 1 milling premiums remain at £16 to £18 over feed at the point of delivery with group 2`s £7 lower.

The barley market is also heavy; exports for the first half of the season stand at 491K out of an estimated 1.9mln mt surplus. Intervention offers have only just exceeded 71K, suggesting that offers will increase sharply before intervention stores close forever in May. Outlook: The main damage has been done and a period of stability is possible; any rallies remain a selling opportunity.

Oilseed Rape

Sharp falls in Soybeans knocks UK market.
Heavy rains in South America raise quality concerns.
Concerns over budget deficit shifts to UK sending STG weaker.

Nearby Matif has lost €3.25 to the time of writing with the domestic market easing back £2 in the same period. Domestically we have seen interest from the crusher move to April onwards as March requirement seems to have been satisfied. The latter part of the week has seen outside market influence weigh on European values.

US soybeans retreated in the second half of the week following soybean export and crush report numbers being below trade expectations. The January crush number reflected a crush of 167.2Mn bushels which was below the 170Mn bushel expectation. This alongside the disappointing soy oil demand numbers following the removal of the bio diesel tax credit has seen funds sell off positions ahead of the weekend, these falls knocking EU and UK values.

Heavy rains in South America, particularly Argentina, are starting to cause concern over the impact on quality Whilst output is still expected to be 52.5Mn tones, a continuation of the wet weather could hit final yield figures. The same rains are delaying the Brazilian harvest and there have been reports of flooding in some areas, however the benefit of pod fill from the rains is currently out weighing the flooding issue and production is still pegged at 66Mn tonnes.

Currency this week has had a volatile second half following comments from the Bank of England and concern over the UK`s ability to service its own budget deficit. With Greece under the microscope in the EU the market has turned its attentions to the UK which shares a similar deficit figure of 12% of GDP with Greece. Whilst the weaker pound helps exports, any move in the country`s credit rating could prove disastrous for the fragile economic recovery.

Pulses

Beans: prices have eased back again this week however values have been more resilient than the wheat market. There has been some export business concluded for feed quality and we hope this will offer support level to the market. Consumer interest remains and current values should be considered while the interest remains. We are still waiting for spring bean buyers to return and believe interest is likely to return towards the middle of next month, following some French origination shipments.

Peas: market for premium homes remains quiet with bids being actively sought. With this in mind growers should consider feed values.

Oats

Oats: market remains devoid of bids for milling quality. There is still some feed interest however this is limited to north of the wash and equates to an ex farm equivalent of £62 per tonne. We are still seeing some export enquiries but these have not translated into trade; however the current weakness in STG could help competitiveness. New crop values have been indicated at £72 ex farm, dependant on location.

Seed

Shortages are beginning to bite in the spring market as growers attempt to diversify away from spring barley.

Supplies of most first choice spring wheat`s are gone, spring beans are sold out and Linseed may be about to get tight as several large seed lots in the wholesale trade have failed germination.

Openfield currently have stocks of Prophet and Crackerjack large blue peas, Abacus Linseed, Ability OSR and of course spring barley all looking for a home, all from our own production and having undergone Openfield quality control.

The maize market has been active as growers buy before the early season discounts run out. Despite comments in the trade that orders are slow, our order book is currently at parity with the same time last year. The advent of Biogas digesters has increased interest in the crop. Openfield are working with several breeders to supply varieties specifically for this new market. For further details contact our seed offices.

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.