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Gleadell Market Report

GRAIN MARKETS – David Sheppard, managing director

Wheat stocks have declined in Spains leading grain ports, although trade sources do not expect a supply shortage due to slow demand from livestock farmers and shipments of maize from the Ukraine.

Egypts GASC purchases 170,000mt of US/Australian/Argentine wheat for March 21-31st shipment. Total purchases since the start of the 2010/11 campaign are now placed at 4.635mln/t, compared with 5.53mln/t in the 2009/10 season.

Turkeys TMO issues tenders for the purchase of 300,000mt of milling wheat for shipment 1-25th March.

Iraq purchases 300,000mt of wheat from Australia and the US as country plans to set-up purchases to cover domestic shortfall.

French Farm Ministry keeps 2011 soft wheat area unchanged at 4.994mln hectares, up 1.5% on the area in 2010.

Ukraines Agrarian Fund will purchase 1.245mln/t of grain from the 2011 harvest for the state intervention fund.

Russia may have an exportable grain surplus of 15mln/t in the 2011/12 crop year, but will export less as the government may want to keep stocks domestically lobby proposes quotas to restrict exports in 2011/12.

Snow and rain are forecast in Chinas wheat-growing areas which have been hit by drought conditions, with the FAO stating the countrys main wheat producing areas may be at risk reducing output.

AWB reports that a buoyant global market could help Australian wheat output reach a record approaching 30mln/t in 2011/12.

The USDA report released Wednesday trimmed US corn stocks by 9% to 675mln bushels, or just 5% stock-to-use ration, which is just above the 4.5% ratio seen in the great depression year of 1936/37. Increased usage for ethanol production resulted in the decrease, as the expected lower export projection was left unchanged. This decrease in the carry-out adds more emphasis on corn acreage for 2011/12, with the trade now estimating an additional 5-7mln acres will have to be planted this year to replenish stocks.

Wheat markets already supported by a pick-up in international tenders.

Weather concerns in the US relating to the winter wheat crop and talk of drought conditions in China, leaving the potential of lower winter wheat production rode the wave, as corn markets marched higher when Chicago opened yesterday. Supplies of corn and quality wheat remain tight, meaning new crop harvests have to deliver on both yield and quality and this is far from a certainty.

OILSEED MARKETS – Jonathan Lane, trading manager

There was nothing exciting in the recent USDA report for soy beans or wheat, but the corn stocks figure was a bit of a shock and is of real concern for a market that is already in a dangerous tight supply situation.

The report prompted a sharp rally in Chicago corn, and soybeans followed rallying to a new 2 1/2 year high.  The absence of any adjustments in the US government’s forecasts for the soybean supply and demand focused all of the markets attention on corn, and the soy market must keep pace to avoid losing more acreage to corn in the spring.

In Europe, the rapeseed market has been somewhat lacklustre in the last week with prices on the Matif rapeseed futures down 4.25 on the week. The lack of fresh oil and meal business, has kept the crush away from the market and, on paper, old crop crush margins are now coming under severe pressure, there is nothing to entice any fresh buying. The expectation of 7-800thd/mt of Australian seed arriving in Europe over the next 2 months is also keeping the market on the defensive and this has prompted many long holders to throw in the towel and book their profits.

However, whilst we recognise that these are still historically high prices the supply and demand balance for Europe remains tight. There is still a significant amount of business to be done for the second quarter and we are not convinced that we wont see higher prices in the future.

GRAIN market information contact David Sheppard, managing director, on 01427 421222

OILSEED market information contact Jonathan Lane, trading manager, on 01427 421222

1.  Gleadell Agriculture currently has offices in Full Sutton (Yorkshire), Hemswell (Lincolnshire),  Swaffham  (Norfolk), Lyndon (Rutland), Warminster (Wiltshire) and Bilsborrow (Preston).

2.  Gleadell Agriculture Ltd is equally owned by Toepfer International – based in Hamburg, who trade in all agricultural products globally; and InVivo – based in Paris, who trade agricultural products on the international markets and operate major grain storage and handling facilities.

3.  Prices quoted are indicative only at the time of going to press and subject to location and quality.

4.  Gleadell Agriculture cannot accept liability arising from errors or omissions in this publication.

5.  mln/t = million tonnes, mt = metric tonnes, kg/hl = kilogram per hectolitre, k/mt = thousand tonnes.

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