News

International grain markets have been dominated by the corn complex this week when rumours of Chinese corn purchase were confirmed. Two cargoes are due to be loaded in May for June arrival and whilst these cargoes are small in the overall scale of things, this could be a pre cursor to a programme. Various analysts have been indicating that Chinese corn stocks are overstated and if true this could be explosive in the corn market as stocks are already perilously tight and values have lifted off seven month lows.

Wheat was caught up in the furore and traded in a $0.50 cent range (£12) in one session, but there has been little physical trade. In the EU the corn market has also been firmer in sympathy with the world situation, mainly driven by farmer retention. This in turn has lifted the price for feed wheat, with more wheat being shipped to the Iberian peninsular from the Baltic States and the UK.

Outlook: Traders and speculators will be watching the wires closely to see if China has a bigger appetite for corn. Meanwhile the Northern EU wheat crop is progressing well and corn planting is well ahead of normal.

Wheat

Grains on the defensive
Euro weak
UK supply and demand revised

It has been a slow week in UK cereals. A combination of public holidays, slow farmer selling and volatile foreign exchange markets has slowed the export momentum. There was some spot export buying interest early in the week due to a barge strike in Northern Europe, but this was resolved and the buyers backed off.

Domestic users remain on the sidelines, only buying for spot needs, but have rolled many April purchases into May.

Defra/HGCA issued a revised supply and demand on Wednesday. The main changes were in domestic usage. Wheat consumption has been reduced by 128K, while barley usage has increased by 291K. This is largely to be expected with the discount that barley has been to wheat, although free market barley and intervention levels have merged.

Outlook: It will take a few days for Iberian & Irish buyers to swallow an additional €5 after a rise of €20 in the last few weeks! New crop looks vulnerable but is exhibiting impressive strength.

Oilseed Rape

Tight old crop supply supports the market.
Falls in global commodity markets weigh on sentiment.
Hung parliament leads to sharp falls in the value of STG.

Short trading week following the bank holiday weekend saw a measured start to the week`s trading activities. The new nearby Matif contract is August now that May has rolled off of the board. The contract had gained almost €7 over the week before heavy falls in crude oil and commodity markets across the globe weighed on values and the market has corrected today trading €4 lower on the day. Only a sharply weaker STG, following the election outcome offered any support to the market with UK values gaining £2 on the week, with most of the gains on the day. First hand sellers for old crop remain scarce with eight weeks remaining at the very least before we see any new crop produce. With the moves in STG offering some support to falling external markets old crop values could be seen as an opportunity to sell.

There have been a number of external global factors this week impacting on value calculations. With the Brazilian harvest now set at 97% complete we have seen reports of problems at stores, as they struggle to cope with the record harvest as recent estimates are at 67.8Mn tonnes. Argentinean progress is now pegged at 67% complete with a target of 55Mn tonnes. Argentine soyoil exports continue to be shunned by the Chinese with a recent monthly update showing no shipments at all in April with none planned for May either. We have seen on the newswires that there have been protests in Argentina over the country`s agricultural policies namely the tax on wheat, corn and soybeans. There is unlikely to be any relaxing of tax levels as a USD$ equivalent of $7Bn dollars is brought into the public purse via these tax takes.

US markets were impeded in the early part of the week following gains made in the USD$ as the EU economic situation withered the European currency against both the USD$ and STG. Even with the BP oil rig disaster crude oil has slipped over 8% over the last three days to the lowest levels since February. US crude stockpiles rose 2.76Mln barrels last week compounding fears that the global economic recovery could be derailed by the European financial problem. The firmer dollar has also directly weighed on US commodity prices, with little relief seen from an announcement by the Chinese that they could relax certification requirements for US bean oil, seen as a replacement for Argentinean sourced oil. This week`s weekly soybean export inspection survey came in below expectations and this coupled with the firmer USD$ has set the tone for the remainder of the week. There is the USDA supply and demand report due out next Tuesday which could show a further fall in carry out numbers.

What a difference a day makes. Against the €uro, STG started the week on a firmer footing, with the Greek debt situation the driving strength in the currency. This remained so until the exit poll figures released late Thursday pointed to a hung parliament. The currency then started a 3.5% decline against the €uro and fell further against the USD$. STG has recovered some ground today but the uncertainty of just who will govern the UK will weigh on sentiment in the very short term. Concern remains over the €uro situation with the main fear now of potential contagion within the EU as governments and investors alike assess the cross exposure to those countries under fire. We have seen a report this week that Portugal is at risk of having its debt rating cut, with Spain in a similar situation. Bank of England interest rate decision is due on Monday 10th with no change in rates expected. Currency will react to any news flow on the formation of a majority governing party over the weekend.

Oats

The market is little changed this week. Values remain at £78-£80 ex farm dependant on location, with the one buyer supporting the market at present. We see limited upside in values from here. There has been some limited interest for feed quality with £65 ex farm for July as an indicated level. New crop values remain trading in line with old crop values with bids seen in the mid £70�€�s region. We can continue to seek out new crop export opportunities but the firm STG has effectively closed this avenue for us at present.

Pulses

The beans market has seen further improvement this week. Spot market May feed bean demand has now been met, with June and July still required the indicative values are at £145 ex farm dependant on location. The gain in the feed market has meant a narrowing of the premium for springs. New crop market remains unchanged this week following the gains last week as the strength in STG weights on values. New crop spring premiums over feed are indicated at £8- £10 with feed values indicated at £120 ex the farm.

For peas last week, interest from compounders has meant that feed quality peas are trading in line with feed bean values. New crop market remains void of bids.

Seed

The return to colder weather has not deterred the sportsmen from booking their Game Cover crops. Openfield`s Hi Bird maize which is vigour tested has proved a popular choice in a season where proper establishment of these crops may be challenging. We also have mixture will comply with ELS schemes.

The cold is also stressing the winter OSR crop and exaggerating differences between varieties, Castille and Excalibur began flowering in many areas in the warmer weather, while Cabernet a later type is being further delayed by the cooler overcast conditions. Monsanto�uro;�s breeder has reminded us that this was also the case last year when Cabernet went on to top all Southern trials.

New variety sales have been brisk with Invicta selling well nationally and Warrior in demand in the South West. Openfield are still offering a soft milling buy back on Invicta, speak to your local Farm Business Manager for details.

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.