News

The first USDA world supply and demand was issued on Tuesday. There were no surprises on wheat with production forecast at 672mln compared with 680mln this year. Consumption is predicted to rise modestly leaving the world with close to a 3 month supply of wheat at the end of the season. It is difficult to argue for a strong wheat market from a fundamental perspective.

Any surprises will come from the corn sector where consumption is within 8mln MT of production and stocks are perilously tight. These assumptions make no allowances for old crop corn imports into China. So far 239K has been confirmed, but this figure may increase as private importers start to make purchases. Although planting is going very well in the US (best in 40 years) this again is not the case in China which is the world`s second largest producer.

International business is slow. Algeria bought 500k of French wheat for June and July shipment and the price would suggest that shippers expect the July portion to be shipped at harvest.

Outlook: the wheat fundamentals speak for themselves, but all this is in the price. Corn on the other hand remains finely poised and new crop in the Northern hemisphere will not be harvested until the autumn.

Wheat

Grain markets slow

It has been another week of uncertainty in cereal markets. Political and fiscal issues are leading to extreme volatility in foreign exchange markets. As UK wheat is currently priced off exports the volatility has spilled into the grain market. There have been days where intraday trading ranges have exceeded £2.50/MT. Understandably physical trade is slow and fragmented, with bid/offer spreads very wide. As is often the case in slow markets, prices have drifted lower with £100 ex farm for feed wheat now only available for late summer collection or early 2011. Until there is some stability in the markets trading will continue to be challenging.

The milling market is largely unchanged with full specification group1 wheat trading at £16 to £17 over feed at the point of delivery. The group 2 variety Cordiale has found some specific buying interest at a small discount to the group 1 price for suitable parcels.

Outlook: Good exports through the spring has reduced what was a burdensome surplus, further prices discovery will be dependent on the final output of the 2009 Harvest.

Oilseed Rape

EU rescue package and UK Government election makes for a volatile week.
USDA report has negative tones for soybeans.
Coalition government adds support to STG.

With a difficult start to the trading week in which the nearby Matif has gained €4 to the time of writing with domestic market values weighed down with the strength in STG over the later part of the week we see values £1 better. Old crop market remains supported and a Canadian Canola report out this week shows that ending stocks will be circa 7%, lower than estimates, helping EU new crop markets. With currency moves figuring heavily in pricing of late we remain of the view that the support in the old crop market should be seen as an opportunity to sell.

Outside of the domestic parliamentary discussions other news this week has been the USDA Supply and Demand report. Overall the report proved to be bearish for soybeans as it forecasted a 2Mn tonne increase in world stocks despite an 8Mn tonne lower crop and 11Mn tonne hike in demand. The report went on to show that the USDA forecasts US exports will suffer in the future from increased competition from South America and Indian supply with numbers expected to fall to 1.35Bn bushels from 1.455Bn bushels this year. The negative tones were punctured in the latter part of the week following a round of fund buying and news that US exports are running 26% ahead of the same time last year.

We have also seen a report showing that at present there is little impact on shipping within the Gulf of Mexico from the BP oil rig disaster. Attention will be focused on any reports of disruption as the Gulf is an important shipping lane for US trade. Latest reports from South America show that the Brazilian harvest is now complete to all intents and purposes with a figure of 99% of the planted area harvested, with no further mention of the issues with stores struggling with the harvest volume as reported last week. Argentinean progress has jumped 10% this week and is reported at 77% complete

What a week in the currency markets. The €750Bn rescue deal announced over the weekend to support the Greek economy along with the announcement, eventually, of UK`s first coalition government for over half a century have made for yet another volatile trading week with a 4% trading range seen. STG was on a weaker footing from the off following the hung parliament vote last week. This weaker trend was further compounded over the weekend with the joint EU/IMF funding package, announced to support beleaguered EU economies. Although the size of the package was clearly aimed at removing any concern for other EU members falling into the same situation as the Greeks, the recent announcement by the Spanish Prime Minister over the austerity measures needed to manage their 11% budget deficit will be of some concern, suggests more problems could be just around the corner. STG made significant gains on the back of the CON/LIB coalition announcement however these gains were undone after the release of the Bank of England inflation report showed that UK economic growth risks remain on the downside and UK budget cuts may need to be more demanding. We will just have to wait and see what the new Government`s economic plans are.

Pulses

The beans market has had an interesting week with small gains suggesting the market is reaching its peak in the medium term with a single buyer remaining in the market for June. This suggests that when demand has been met a price correction could follow. Current feed indicated values are £145-£150 dependant on location. Spring beans remain supported with premiums now reflecting £8-£10 over feed values again dependant on location. New crop market remains largely unchanged this week with new crop spring premiums indicated at £8- £10 with feed values indicated at £120 ex the farm.

The peas markets remain for June as compounders continue to include peas as a substitute with values indicated at £141-£146 dependant on location. We have also seen enquiries for marrowfat peas with opportunities for June movement. Growers with marrowfats to market are encouraged to contact their Farm Business Manager. New crop market remains void of bids.

Oats

The market remains little changed again this week. Values remain £78-£80 ex farm dependant on location, with one buyer supporting the market at present. We see limited upside in values from here. Little interest remains for feed quality oats with £65 ex farm for July as an indicated level. New crop values are indicated around 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 stifled opportunities at present.

Malting Barley

Malting Barley futures market started trading this week. The € denominated, Parisian listed futures should add another tool for those in the market place. It remains to be seen whether there is universal take up of the contract as concern remains over the depth and liquidity of the market, only time will tell. We have seen results announced from AB Inbev, the world�€�s number one brewer that profits are up and demand volumes continue to grow in its southern hemisphere operations, a complete contrast to the European business. We have also seen news that Heineken has agreed a €5.3Bn deal with the South American group FEMSA, to take over its SOL brand beers. Markets remain moribund this week with old crop trade limited to some short covering in the market place, with spring values indicated at £88-£90 ex for May dependant on location.

Fertiliser

The top up market continues and we still have early spring like and cold conditions.

Final applications on milling wheat`s are now being planned.

Top up loads to most areas can be delivered within a very short space of time.

Thoughts will soon move towards another new season, more of which in the next few weeks.

Seed

Buying of oilseed rape seed continues with a pace. The varieties Dimension and NK Grandia proving to be most popular and continued interest in both Sesame and DK ExPower is making availability for these two varieties very tight.

Lots of questions and observations on appropriate seed treatment choice and performance is driving increased uptake of Cruiser for use on this coming seasons plantings of oilseed rape.

The on-going issue of unseasonably cold soils and night-time frosts is causing flowering and podding issues for several later flowering OSR varieties. We continue to work closely with the breeders to offer pertinent advice on this phenomenon.

There are new variety sales of cereals, namely the new group 3 biscuit wheats Warrior and Invicta (Openfield are offering a soft milling buy back on Invicta, speak to your local Farm Business Manager for details.)

KWS Cassia 2-Row feed barley and the hybrid 6-Row barley Volume are building a real head of steam too.

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.