News

US markets on defensive following bearishly construed USDA report
US corn stocks and plantings in line with expectations
US soybean stocks above expectations, plantings 400k acres below trade estimates
US wheat stocks as expected, spring wheat plantings 500k acres above expectations
Argentine dock strike nearing a resolution
Black Sea wheat availability remains tight
UK wheat still attracting export interest
Better UK economic data strengthens sterling

The long awaited UDSA stocks and plantings report was the catalyst for sharp decline on CBOT wheat, soybeans and corn despite many of the numbers being in line with trade estimates. The surprises were the increase in March 1st soybean stocks and the unexpected increase in spring wheat plantings by 500k acres. Wheat and corn stocks were in line with trade expectations whilst both soybean and corn plantings came in below trade expectations. Whilst there appears to have been nothing too unexpected in the numbers, the lack of any bullish momentum engendered in the report appears to have only confirmed that there will be no shortage of wheat, corn and soybeans barring any adverse weather from here on in. The markets focus will now turn to weather, fund activity or lack of it, and currency movements for direction in the coming weeks.

UK wheat prices have remained firm due to brisk export demand, aided by recent sterling weakness against both the Euro and the US dollar, and the lack of availability of other origins including the Black Sea. This has resulted in fresh demand both intra EU and to Third Country destinations which could tighten the UK 5&D the longer export demand persists. Producer selling in the UK has been readily absorbed, predominantly by shippers who are happy to take advantage of the renewed demand to keep their elevators ticking over particularly whilst Black Sea sellers are out of the market. Euro weakness against the US dollar has also allowed France to conclude business to Latin America and Asia, reducing their surplus and supporting their market in the process.

The UK market should remain underpinned on old crop in the short term by ongoing export demand but need to monitor the availability of other origins, bearing in mind that Russia has 8Mn mt of Intervention stocks which could be made available at some stage.

Oilseed Rape

USDA planting and stocks report knocks market
Argentinean port workers strike-settlement reached
Better economic data supports STG

Nearby Matif has gained €1.50 to the time of writing with the domestic market treading water over the same period, with a firmer STG weighing on domestic prices. Old crop supply appears to be tight and due to a lack of sellers has helped strengthen old crop values-new crop has remained stagnant as the record production expected for 2010 harvest in the UK and fallout from the USDA report (see below) has kept a lid on values.

US markets have had a volatile ride this week with the soybean market losing 4% on Wednesday due to the USDA report. The planting intentions and stocks report issued this week proved to be bearish for US Soybeans as the stock figures were higher than anticipated-reported at 1,270Mn bushels ahead of estimates for 1,207Mn bushels. The report also reflected a record planting intention albeit 400k acres below trade estimates with 78.1Mn acres pencilled in for soybeans for next year. Although there was a weaker USD$ over the latter part of the week and at the time of issue the Argentinean port strike was ongoing, (please see below) prices could not be supported.

South American news has been focused on the Argentinean port workers strike which has been ongoing for over a week and has had a large knock on impact on the export of Argentinean soybean. The strike, which is almost an annual event, by the port workers was for a 30% wage increase this year and 15% next year. Port authorities had offered a 25% package but were rejected. News earlier on Thursday suggests that an agreement has now been reached with a 27% increase for this year alone; suggesting that further action could be taken. Brazilian harvest progress has been reported as 66% complete as of March 26 and is still on track to produce circa 67Mn tonnes.

STG has again featured heavily this week with some positive economic data at the beginning of the week setting the scene for gains to be made by the currency against both the €uro and the USD$. Reports issued at the beginning of the week showed that UK GDP (gross domestic product) had risen to 0.4% ahead of expectations of 0.3%, also that the budget deficit had narrowed over the quarter to a £1.7Bn from £5.9Bn last time. There was also a little support from the nationwide house price survey the reflected house price rises of 0.7% month on month compared to 0.2% expectation. Although this has supported STG in the short term, there are concerns that a hung parliament could still be a reality and therefore could prevent further significant gains until the election.

Fertiliser

The week before Easter is usually a period of intense activity, with growers keen to get product on farm before the Easter break. However with a sharp reminder in many parts of the country that winter hasn�€�t quite left us, fertiliser application was not an immediate thought on the minds of many. When spring does eventually decide to grace us with its presence activity will be focused into a short and intense period of activity as crops race to make up for lost time. Fertiliser suppliers too will be pressured in a narrow application window, so any top up N or NPK requirements will need to be ordered as soon as possible to give crops the best opportunity in what could be a short spring.

Pulses

With beans the market has drifted this week in line with the wheat market. With end consumers failing to take delivery from processors, bids for springs have fallen away this week and is unlikely to be reversed until there is a movement in the chain. There is no export market interest for either feed or human consumption quality at this time. New crop markets remain unchanged this week, indicated at £115 ex farm November dependant on location.

The peas market remains quiet with feed values indicated at £130 ex farm for April/May movement. Bids for better quality peas remain scarce but have been reflecting a £5 premium over feed values and again, dependant on location.

Oats

There is little news to report this week. Limited trade has been seen with milling quality ideas for June, translating back to an indicated £68-£70 on the farm. Feed quality oats have suffered with the discount widening to £10, a further £2 form last week, with movement opportunities now in June. We have seen no interest in the new crop market this week.

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.