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Gleadell Market Update


David Sheppard, Gleadell Agriculture managing director, comments:

         Russias Prime Minister signs an order banning exports of wheat, barley and maize from 15th August to December 31st.  The order also proposes that the Government requests the executive commission of the Customs union of Russia, Belarus and Kazakhstan to apply the ban to exports of all three countries.

         Russia to review the export ban in December, but have not ruled out potential extension into the new year after more crop information is known.

         Analysts estimate the wheat crop at 43-44mmt, down from 61.7mmt last year.

         Ukraine seeks to curb grain exports in 2010/11 Final decision to be made next week.

         French farm ministry sees 2010 soft wheat production at 35.16mmt, down 3.3% on last year.

         Strategie Grains cuts its estimate for this years EU soft wheat crop to 128.2mmt, 1.3mmt less than forecast last month.

         Egypts GASC switches to French wheat, purchasing 360,000t during the past week – a replacement for Russia.

         Indian wheat stocks a/o August 1st were at 32mmt, above the target of 17.1mmt Government looking at potential exports.

         USDA cuts Global wheat production by 15.3mmt, mostly on reductions for FSU-12 and EU-27 countries. Production for Russia is lowered 8mmt, with Kazakhstan down 2.5mmt and the Ukraine down 3mmt due to extreme drought and record heat. Even with lower demand, due to the higher prices, ending stocks are projected much lower at 174.8mmt, down from 187.1mmt last month.

         DEFRA , in their June census, has reduced the English wheat area by 71,000 hectares a fall of over 500,000 mt of end crop. In the current scenario of wild price fluctuation, this may seem like a drop in the ocean – but it certainly tightens up the UK balance sheet to leave the UK exportable surplus at under 1.5 mln mt.

Summary Over the past week, the buy the rumour, sell the fact scenario was evident as, after the initial surge higher on the Russian export ban, profit taking entered the market bringing prices back lower. There is much uncertainty over if and when the Russian ban may be overturned but, with Russia pushing its neighbours to follow suit, market volatility will continue in the short-term.


Jonathan Lane, Gleadell Agriculture trading manager, comments:

Having achieved a new contract high last week, the oilseeds markets have eased back in the last week as traders have booked profits and squared positions ahead of todays Crop Production and supply and demand reports. Production was expected to be up to 93.55mln t, but the actual report gave 93.37mln t still a record, but below expectations nonetheless.

The EU rapeseed situation remains tight. German analyst Oil World put the EU-27 crop at 19.7mln/t this week, giving further confirmation that the EU is becoming increasingly dependant on third country imports.

On paper, Australian seed is still some 25 too expensive to trade into the EU (despite some rumours that something had been traded).

The ongoing execution issues in the Black Sea regions are adding further complications for crushers, and the new EU regulations regarding sustainability under the Renewable Energy Directive, that come into force in Germany from 1st January 2011, also make it increasingly unclear as where the EU processors are going to source there seed from.

Summary Despite the retrenchment from the highs this week, rapeseed prices still look supported in the medium term.

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