Gleadell Market Report
FEED WHEAT
David Sheppard, Gleadell Agriculture managing director, comments:
- Analysts see Ukraines 2010 wheat crop at 17.6mln/t down from 20.9mln/t in 2009. Ukraine plans to limit grain exports to 2.5mln/t this year and another 2.5mln/t in the rest of the marketing season (January-June 2011). This has not been confirmed by the Ukraine government yet.
- Russia plans to discuss sometime after October 1st whether to extend a grain export ban into next year, after the much-discussed severe drought has affected the countrys grain crop. Rains are expected in drought-affected European Russia and, while they are unlikely to prevent crop damage to this years crop, they could improve conditions for winter grain sowings.
- Algerias 2010 harvest seen lower than last years 6.1mln/t, but OAIC reported no need to import durum wheat and barley due to adequate stock levels.
- Western Australian winter wheat crop saved by rain, but more is needed in the coming weeks.
- Continued rain in Germany is increasing concerns over quality. Traders report that most are now expecting a substantial portion of the unharvested wheat to be only feed quality after so much rain they added feed wheat supplies from Germany will be much larger than previously thought while export supplies of higher-quality wheat may be smaller than hoped.
- The recent USDA report and another Egyptian purchase of French wheat last week saw the market surge higher into the weekend. However, some element of profit-taking and reports of potential rain in Russia being beneficial for winter sowings saw the market retreat off the highs.
- This morning news wires reporting that Russia may have to increase levels of imports to meet domestic demand has re-ignited the market. While these imports should be sourced from the Ukraine and Kazakhstan, EU traders point out that helping Peter to rob Paul could further limit non-FSU grain exports from these states.
In summary, there is a separation between the milling wheat market, which is in demand, and the feed grain sector feed wheat, feed barley, rye, tapioca, maize and sorghum. The feed grain sector remains under pressure with compounders reluctant to commit as they analyse least cost formulations. The UK wheat crop may yet fall into either category (probably both!) and everything will need to be sampled this season.
OILSEED RAPE
Jonathan Lane, Gleadell Agriculture trading manager, comments:
- The rollercoaster ride continues! The rapeseed market, which is usually the most volatile of the grains markets, has looked comparatively tame in the last week compared to the price movements in the wheat market. With the increased level of fund activity in the markets these days, we are finding that moves in the grains markets are also filtering, but to a lesser extent, into the oilseeds markets.
- With the recent retrenchment in the grains markets, the rapeseed market has come off its highs. However, we still believe that fundamentally we should continue to see prices supported in the medium to longer term.
- The declines in rapeseed production in the Black Sea countries, the lower than expected rapeseed crops in Europe and the declines in the oil contents this season are all pointing towards a tight supply and demand for the European Union. The rapeseed market may have got caught in the fun and games associated with fund activity in the grains markets this week, but ultimately the EU needs to import more seed or further ration demand – and the only way it can do this in our opinion is with higher prices.
For further information contact David Sheppard, managing director, on 01427 421222 david.sheppard@gleadell.co.uk
Jonathan Lane, trading manager, on 01427 421222 or email jonathan.lane@gleadell.co.uk