News

Imminent northern hemisphere new crops and plentiful supply have seen Chicago wheat futures set new contract lows yet again this week. We saw a minor blip back upwards yesterday following the USDA`s 4mln mt reduction in world production and ending stocks; EU production was reduced by 2mln mt to 143mln.

Given that there is less slack in the world corn S&D, the markets were more interested to see that the corn stocks were reduced by a similar amount, attributed to greater ethanol usage.

Our new crop physical markets have generally been on the defensive as EU / Baltic nations approach harvest. Bulgaria & Romania have been aggressively seeking out harvest markets into the Med. The Spaniards are using up old crop barley stocks with a big new crop in the pipeline.

Outlook: Good crop prospects, decent weather and plentiful stocks do not paint a particularly bullish picture for wheat and barley in coming weeks. Keep an eye though on corn as this will be the key to price development.

Wheat

Grain prices continue to drift
Sterling stronger

Early in the week, sterling hit its highest level since November 2008 against the beleaguered Euro, setting the tone for what has been a relatively quiet few days. As is usual for this time of year, old crop markets are quite disjointed. The hangover tonnage from May along with spot sellers looking to clear stores, have pushed markets lower and forced the spread between June and July wider.

The good news is that the UK is still a competitive exporter to 3rd countries and that this nearby glut of wheat has presented shippers with an opportunity to make further sales for June, with at least one 50k+ vessel sold off the south coast destined for Asia.

In contrast, there are still plenty of buyers of domestic July wheat which has the potential for a recovery once the June logistical issues are sorted out.

New crop is going to prove more of a challenge early on given the strong competition coming from Eastern Europe and the potential for further sterling gains.

Outlook: Have we oversold the UK old crop? We won`t know for a few weeks yet. Any domestic tightness will be short-lived before the new crop battle for export sales commences.

Seed

Openfield and UAP are hosting various Winter Cereals and Oilseed Rape Demonstrations

for further details please contact Openfield seed offices

Midlands and Eastern 01476 862702 - Southern 01264 321572 - Northern 01937 848119

16th June - Openfield Winter Wheat Varieties - Wakerley Central Trials Site, Nr Wakerley, Stamford, Lincs LE15 8PA - Time TBA

23rd June - Openfield and UAP Winter Wheat and Oilseed Rape Varieties - interaction with nitrogen and fungicide programmes - Warren Farm, Crawley, Hants SO21 2PW, guided tours

24th June - Openfield Winter Cereals Demonstration - Hutton Wandersley, York YO26 7LL - 10 am

28th June - Openfield and UAP Winter Wheat Varieties - interaction with nitrogen and fungicide programmes - Rushbourne Manor, Hoath, Kent CT3 4JP various tour times

29th June - Openfield and UAP Winter Wheat Varieties - Woeful Lake Farm, Sherborne, Glous GL54 3PR various tour times

6th July - Openfield and UAP Winter Wheat Varieties / fungicide interactions - Low Toynton, Horncastle, Lincs LN9 6JU - Time TBA

Oilseed Rape

Values: June £265 ex farm, Harvest £240 ex farm
Old crop fundamentals unchanged - tight old crop supply supporting the market
Concerns over Europe Rapeseed crop yields

Old crop: The old crop still remains firm with little volume being traded as supply tightens. Prices have traded between the £260 and £265 ex farm mark. Prices may come under pressure with the approaching harvest just 5 weeks away.

New crop: Harvest prices have been trading in the £230 to £240ex farm range. There are currently concerns over the yield potential of the crops in Germany, France, Russia, China and the Ukraine many of whom have revised their crop forecasts down. The forecast total EU crop now stands at 20.8 million tonnes [21.6 million tonnes in the prior year]. In the long-term, domestic new crop prices are likely to come under pressure with the recent rains in the UK this week taking the pressure off the crop after the unseasonably dry May. The UK crop is estimated at circa 2 million tonnes outstripping domestic demand.

The nearby Matif has seen strong gains this week off the back of the aforementioned crop concerns in Europe leading to supply fears coupled with traders covering short positions. STG continues to firm against the €uro making the Export market difficult. At the time of writing, the Matif August contract is up €7 on the week.

The Soybean market remains bearish with concerns over the Global economy, large carry over stocks and 75% of the crop being assessed as in good to excellent condition weighing down on prices. The bullish sentiment from the USDA reporting China buying 40,000 tonnes of U.S soybean oil was short lived. With a large soybean crop and the expectation of high yields the market outlook is likely to remain bearish going forward.

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

Fertiliser

The Cereals Event is always a convenient time to discuss the fertiliser market and this year was no exception. However as the manufacturers had yet to release terms for the new season, this gave us an opportunity to discuss product selection and also to talk about topics such as Sulphur recommendations especially on Oilseed Rape. This is an area we will return to in the next few weeks as the market develops. On the commercial side our Farm Business Managers should be able to discuss the key messages and market projections early next week.

Pulses

Beans, old crop values have slipped by as much as £10 this week as buying demand recedes as homes are now full. Trades that have been seen are small top up volumes only. Indicative feed values are £135-£138 dependant on location. New crop market has given back £3-£4 this week on the back of the retreat in wheat values. New crop spring premiums are a notional £10 with feed values indicated at£116 -£118ex the farm November. €/£ rates remain volatile and preclude export opportunities at the current time.

Peas, with demand for feed beans easing back the pea market has seen the recent support for peas as a bean replacement now removed. New crop market remains void of bids. Buybacks: We are now currently offering a marrowfat pea buyback; please contact your Farm Business Manager for further details.

Oat

Oats, market remains unchanged this week. Limited July movement opportunities remain with values indicated at £72-£75 ex farm dependant on location. 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 again this week, driven by a weaker F.O.B market in lieu of domestic consumer bids and continued weakness in €/£ rates. Further rain for most parts of the country and Europe have further eased fears over growing conditions which has dampened the recent European buying interest. New crop values are indicated at £103-£105 ex farm for Oct. Buybacks: We currently have Malting barley buyback contracts available for 2011/2012 crop years; please speak with your Openfield Farm Business Manager for further details.

And finally our thanks to everyone who visited us at Cereals

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.