News

After a few weeks of torpor the wheat market has woken up. As harvest starts in the Southern US states prices have been under pressure, setting new contract lows on the CBOT futures. It is early days and the real yield & quality will not be known for some weeks as the harvest moves north. Seeing values at new lows Egypt has been in the market for early July shipment under their new revised buying terms which has seen the maximum moisture reduced to 13% and minimum 60K vessels. They purchased two cargoes from Russia and one from France. The French sale was enough to stem the fall in EU prices which had been on the slide following beneficial rain over the weekend. Through the winter, Romania, Bulgaria and Spain have had good levels of precipitation and are forecasting good crops. This will see exports from the `Black Sea` and a potential reduction in import needs in Spain.

Outlook: We are on the cusp of the wheat harvest in the Northern hemisphere, corn planting has gone well and price discovery will depend on wheat production meeting forecasts and the US corn crop getting adequate moisture.

Wheat

Sterling gains
Grain prices fall
Milling premiums static

After the bank holiday weekend rain, grain prices were on the defensive from the off. Values dropped quickly in £1/mt chunks on the futures, with the physical market following behind. Ex farm feed wheat is now changing hands (reluctantly) at £95 ex for summer collection. Two factors have been the drivers; firstly sterling has gained ground against the Euro, each Euro cent being worth £1.10/ mt in grain terms. Secondly the weather premium that has been building in new crop over the last few weeks has been given back. Domestic feed compounders took advantage of the dip in new crop levels and took some cover for autumn delivery. As feed values dropped, milling prices have fallen at the same pace. The premium structure is unchanged, but trading is thin.

Outlook: We have seen a good shake out in old crop, but we are still trading the crop size. Any advance in prices however will not be seen for a couple of weeks. Despite the drop UK wheat remains expensive in the new crop EU feed grains matrix, with competition from EU Black sea supplies.

Pulses

The beans old crop market remains well supported although off of recent highs. Current feed indicated values are £140-£145 dependant on location. There are no premiums for old crop springs due to the strength of the feed market-some springs have moved into the feed lines. New crop market remains largely unchanged with new crop spring premiums indicated at £10 with feed values indicated at £117- £120 ex the farm. €/£ rates will be watched closely as a weaker €uro could affect export competitiveness.

Peas markets remain for June as compounders continue to include peas as a substitute for beans. We have also seen enquiries for marrowfat peas. Growers with marrowfats to market are encouraged to contact their Farm Business Manager. New crop market remains void of bids.

Oats

The market has eased back £2 on limited bids as the June requirement is fulfilled. With July movement now in focus values are indicated at £72-£75 ex farm dependant on location, with the one buyer remaining in the market at present. No new crop bids seen this week however guide prices are indicated around old crop values at £72-£75 ex farm. Continued strength in STG precludes export opportunities at present. Buybacks: We currently have Naked Oat buyback contracts for 2011 harvest; please speak with your Openfield Farm Business Manager for further details.

Malting Barley

Old crop markets are unchanged from last week with trade limited to some short covering. Spring values are indicated at £88-£90 ex for June dependant on location. New crop markets have eased back this week following on from a move higher on the back of short covering. With an illiquid domestic market, new crop values are being driven by the F.O.B market with the firmer STG impacting on domestic pricing. New crop values are indicated at £103-£105 ex farm for Oct. Domestically the UK`s Malting Barley Committee provided an update to the list of malting barley varieties it recommends for harvest 2010 most notable was the promotion of Concerto to full approval.

Fertiliser

The European Fertiliser Manufacturers are busy digesting the discussions and assessing implications following the International Fertiliser Industry conference in Paris.

The French market will be a major point of reference at the start of our UK season.

We in the UK have lived with a structured supply of domestic Ammonium Nitrate for two years now, but the French are coming to terms with their own market suffering from plant closures and production problems. This has left our nearest continental neighbours with the lowest stock levels in most traders` memory.

In summary this could have an impact for the UK as the Nitrogen market in Europe may not have as much product available to the market as would normally be obtainable.

Oilseed Rape

Values: June £265 ex farm, Harvest £235 ex farm
Tight old crop supply supporting the market
STG continues to strengthen against the €uro

Old crop: The old crop domestic market has treaded water this week with the fundamentals unchanged. With few sellers in the market and support from tight supply, prices have traded around the £265 ex farm mark. Prices are likely to remain firm going forward up until the Mills are covered at which point the price should trade in line with new crop levels.

New crop: Harvest prices have been trading between the £232 and £240 ex farm range with a limited number of sellers as they await the crop. There are still concerns as to the impact the lack of precipitation has had on the crop with May being the driest reported for 16 years. Nevertheless, with the UK crop estimated at circa 2 million tonnes and domestic demand of 1.85 million tonnes, new crop prices are likely to come under pressure.

The Matif has been relatively subdued this week with little real change from the end of last week even though other markets have responded in the second half of the week to positive economic recovery indicators from the US. STG continues to strengthen against the €uro, further strengthening could see pressure being put on the UK export market. At the time of writing, the Matif August contract is up €0.75 on the week.

Outlook: Old crop to remain firm. New crop bearish supply outlook to put pressure on prices

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.