News

Old crop: Cereal markets have had an erratic few days. Sterling gains against the Euro combined with some sales of Baltic wheat abruptly made UK feed wheat look expensive and UK prices fell back. As time went on EU feed grain values started to recover as did the Euro and UK feed wheat started to look attractive again for May and June shipment. The domestic market remains slow and prices are lagging the ports. Once again there seem to be many consumers who are rolling April purchases into May. Milling premiums are being squeezed as the feed base rises although there is so little trade going on that premiums vary from region to region. Next week will see HGCA issue a revision of the UK supply and demand, which should hold no surprises.

Outlook: As the export interest continues prices will be supported, the million dollar question is `how much more have they to buy`. Short term it feels underpinned.

New crop: There has been a particularly volatile market on new crop as consumers try to prise supplies away from reluctant producers. From the producers point of view much of the bad news is in the price, while consumers point toward high world stock levels and potential pan European exportable surpluses. At the current price levels UK grain looks expensive in the EU feed grains matrix as supplies from the Black sea are $5 to $10 cheaper depending on the destination.

Outlook: Rallies remain for selling.

Seed

A busy week selling Invicta wheat following the release of Openfield`s buy back contract supporting the variety. For those unfamiliar with the variety, Invicta is the new highest yielding group 3 wheat on the 2010-2011 Recommended List and is fully approved for domestic milling and for export. Premiums vary by region so please speak to your Farm Business Manager soon as tonnage is limited.

Openfield`s new environmental / game cover leaflet will shortly be available offering advice and suggesting products for ELS Schemes. You can download a copy from our website, hard copies should be available next week.

Fertiliser

Top up Nitrogen orders are still coming through very strongly this week. If the anticipated rain arrives over the next few days this will be ideal to wash in the Nitrogen already applied that needs to get into the crop. This should then set up Milling Wheat crops for that final bag to get protein to the required levels for optimum output.

OSR

Major fire at German rapeseed processing plant
Markets react to global market wobble mid week
STG remains largely unchanged over the week

A change from the past couple of weeks as we see both Matif and the domestic market give up some of their recent gains. As reported last week, the nearby contract had become technical and hence pricing calculations had moved to the August contract part way through the week. With this in mind we have seen €1.50 lost to the time of writing with the domestic value easing by £2 which has all been in today`s trading session. Old crop remains supported due to tight supply with the old crop. The large spread between old and new crop remains with new crop production weighing on consumer minds. Main European news this week was the large fire at a Bunge oilseed processing plant in Germany. The plant in Mannheim has an annual capacity of 1.1-1.2Mn tonnes. Latest reports suggest that the company have claimed force majeure on contracts for the next 2-3 months-potential 300k tonnes of product.

US markets once again have been reacting to moves in the USD$ and the global market selloff, following the downgrade of Greek government debt to junk bond status. Following further concerns over the €uro/Greece situation the USD$ gained against both the €uro and STG making dollar denominated assets less attractive. A global stock /commodity market sell off followed as fears of another Lehman brother style collapse spread. This negative sentiment was only marginally offset following the release of the canola planted area report by Statscan which, whilst reflecting a record 16.9Mn acres (16.2Mn acres last year) was below trade expectations of 17.3Mn acres. Soyoil has traded lower on the back of the firmer dollar today and this has had a knock on impact on palm oil which is also trading lower over the second half of the week.

Elsewhere China has reported that imports for the month of May are expected to be 4.69Mn tonnes which is 33% ahead of the same period last year. South American reports show that the Brazilian harvest is now 94% complete with Argentina pushing ahead to 54% complete. Some support for the South American soybeans came from Brazil as they announced an intention to increase biodiesel production from 1.4Mn tonnes to 2Mn tonnes a year. As reported earlier in this column the Argentinean soy oil dispute continues to roll on over the quality of oil supplied with no sales being reported again this week to China.

STG has had a comparatively quiet week as the issues surrounding Greece and its debt woes continue to rumble on. The latest news being the downgrade of Greek government debt to junk bond status, as this was largely anticipated by the markets, the impact of the move did little to the €uro/STG rate although it did prompt a move in €/$ levels. We have seen reports on Thursday that show downgrades to both Portuguese and Spanish credit ratings, whilst these are substantially above Greek debt ratings, it serves as a reminder of potential contagion from the Greek situation. It is estimated that UK banks have a combined exposure of £100bn to the three economies and hence the situation will be watched closely for any potential impact on the UK. Due to the general election next Thursday the next Bank of England monetary policy committee meeting will now be held on Monday 10th May, expectations are for rates to remain at 0.5%.

Pulses

With beans the market has improved again this week. As reported last week the return of spring bean buyers has meant that feed users have suffered from a lack of product and this has pushed up feed values in order to compete with gains of £5 seen in some areas. Old crop feed values are indicated at £140ex farm dependant on location with premiums for springs in the £7-£8 region. This has led some compounders to switch to feed peas as a replacement feedstock. The strength in the old crop market has spilled over into new crop with gains of £2-£3 seen this week. New crop spring premiums over feed have widened out to £10. As reported above the peas market has seen recent interest from compounders to replace feed beans and hence values are seen similar to feed beans. New crop market remains void of bids.

Oats

The market has gained a further £2 this week with one north western buyer in the market place. Values are indicated between £75 and £80 ex farm dependant on location. We see values supported for the time being albeit with limited upside from here. New crop values are trading inline with old crop values with bids seen in the mid £70`s region. We can continue to seek out new crop export opportunities.

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.