News

There has been a lot of talk about high wheat stocks over the last few months but it is worth noting that the majority of the stocks are in the main producing regions, the US, EU and Russia. Some of these stocks are held many miles from ports and others in Intervention systems. This week`s purchase of between 300K and 500k tonnes of wheat by Algeria and 25k by Tunisia signals a change to the balance of stock holders. These shipments are for May and June arrival, around the time of the North African cereal harvest which implies that some importing nations are willing to carry stocks as insurance against future crop failures. In contrast India is forecasting another record wheat crop that may necessitate reducing some of their 18 mln mt of strategic reserves.

Both US & EU futures markets have edged away from contract lows, physical trade is slow, but with supplies drying up in the Black Sea some EU feed wheat is starting to look fair value for spring/summer shipment. The 488K of EU exports licenses taken last week takes the season total to 12.7 mln and Intervention offers are heading towards 5 mln mt.

Outlook: We are entering a phase of the market where emerging winter sown crops will be focusing trader`s minds.

RED FLAG: Chinese state media are reporting that large areas of Southern china (Yunnan, Guizhou & Sichuan) are suffering the worst drought in decades!

Wheat

Cereal prices stabilize
Export data issued
Milling premiums hold

The market continued to find export interest in the first part of the week as UK feed wheat looks fair value on International markets. Ex farm feed wheat is changing hands at £90 ex for spring collection in most area`s and vessel loading is going well. Summer collection is only a small carry.

Export data issued by UK customs showed that 210K of wheat was exported in January taking the total for the year to 1.2 mln mt including a revision of 57k to the December figure. Spain was the biggest taker in January at 104K and there was also one shipment to the USA of 21k. This is the first significant third country export (outside of the EU) of the 2009 campaign, which seems surprising given the quality of the UK crop this year. It remains a possibility that there will be a further revision of export data at some point!

Milling premiums are holding for summer delivery but there are few opportunities to gain any premium for spring delivery. Barley trading remains moribund, exports are slow and the weak Euro will hurt the intervention calculation for April.

Outlook: The market feels underpinned in the short term, however, any significant rallies remain selling opportunities.

Seed

The annual rush for seed deliveries before Easter has begun with all species being requested. Service is becoming more of an issue than variety in a lot of cases. Standard lines should present no problems, but `specials` may require patience.

We are able to offer the best service on varieties we are producing ourselves, so please peruse the following list. Maize Grass and Game Cover direct for the breeder should present no problems as stocks are good although we have sold out of the maize variety Nimrod.

England

Barley: Concerto - straw and yield, malting in the east and north, Tipple - first choice malting, Quench - highest yield and malting
Oats: Firth
Peas: Crackerjack and Prophet
Linseed: Abacus
Oilseed Rape: Ability with or without Cruiser.

Scotland

Changing fast as the rush is on, speak to your Openfield or UAP contact.Other varieties are available on request but service levels may vary.

New varieties

Sales are picking up particularly in Scotland and the north where the new Club-Root Resistant variety is selling well, in England the Openfield Select lines of Dimension and NK Grandia are attracting a lot of interest.

Fertiliser

You may recall we reported in Openview on 19th February that an agreement had been made for the purchase of the US Nitrogen manufacturer Terra by Yara International. In the days following this announcement and before the closure of the deal, a counter bid was made by fellow US producer CF Industries. As a consequence of this Yara decided to withdraw their bid. Subject to completion, the UK fertiliser business GrowHow will be a joint venture between CF Industries and Yara. It`s not clear at this stage what plans CF Industries have for the UK, but the message from GrowHow is very much business as usual.

Oilseed Rape

Unemployment figures boost STG late following weaker start.
Argentinean strike talk boosts beans.
Wet weather in Germany causing concern for yields.

Matif has gained €5 to the time of writing with the domestic market making just £2 as a firmer STG hampers further gains in domestic values. Domestically the markets have been relatively quiet with some cover being taken following renewed concern over potential strike issues in Argentina and rising crude values.

There have been a number of factors in play this week. Following a weaker start, the market took its footing from news that China had cancelled a cargo of US soybeans and switched another into new crop. A reversal came about following news on problems in South America and a Federal reserve statement that suggests US interest rates will be on hold for some time, with no change in the foreseeable future, prompting the USD$ to weaken in turn encouraging investment flows into both soybeans and crude oil.

South America has also been in the news with port logistical issues now figuring in the consumers` thoughts and ideas that vessel waiting times in excess of 3 weeks will push demand back to the US. We have also seen reports that Argentinean crush workers (with port workers and truck drivers willing to show solidarity) threatening to strike in the next couple of weeks, which has also caused concern.

STG itself has had a see-saw week with a weaker start following some poor economic data; deterioration in the housing market along with a widening of the UK`s budget deficit didn`t help investor confidence. We then had the Bank of England rate setting meeting minutes released which showed a 9-0 vote for keeping rates unchanged. Interestingly the members touted consumer price inflation pressures as a reason to not extend the quantitative easing programme. The market was then surprised on the upside with a better than expected unemployment number which sent STG firmer and set the tone for the remainder of the week.

Pulses

The beans market remains range bound this week with the market remaining quiet. Spring bean values are still indicated at a £6-£7 premium over the feed values, although the trade is still waiting for the return of the Egyptian buyers to the market place, now anticipated to be mid May into June. New crop feed values remain indicated at £110-£115 dependant on location.

With peas the market remains stagnant with no short term catalyst seen.

Oats

As mentioned last week there has been some volume traded for milling quality produce for late on in the season and this translates back to £70 on the farm. There are still some homes for feed quality produce but this is at a £15 discount to milling quality. New crop positions have been void of bids this week.

Malting Barley

The picture is unchanged this week. Better weather has allowed for significant progress to be made in spring drilling, although it will still be sometime before the actual numbers are known. In the meantime fundamentals remain little changed and so the oversupply scenario remains. We are still hearing of export enquiries although very little is being turned into trade at the present time.

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.