Gleadell Market Report

GRAIN MARKETS – David Sheppard, managing director

French soft wheat exports are up 32% at 10.1mln/t for July-December 2010, with exports outside of the EU-27 reported at nearly 6.9mln/t, up 57% year on the year.

UK wheat exports slowed in December to 266,162mt, bringing the season to date figure to 1.89mln/t, up 87% on the year. This figure is still 500,000mt+ more than Defras estimate for the whole season.

Strategie Grains trims its EU-27 soft wheat crop estimate for 2011/12 to 135.5mln/t, down from 135.6mln/t last month.

Australias ABARE trims the 2010/11 wheat crop estimate to 26.325mln/t from 26.824mln/t previously. This would still be a new record production, with ABARE estimating wheat exports at 16mln/t.

Egypts GASC continues to purchase wheat with a 170,000mt purchase over the weekend (Australian/US/Canadian), followed by another 180,000mt of US/French wheat for April shipment. Since the start of the 2010/11 fiscal year, GASC has purchased about 4.99mln/t of wheat compared with 5.53mln/t last year.

Iraq purchases 350,000mt of wheat from US/Australia in its latest tender. A spokesman for the Grain Board said with this quantity, well be able to meet the nation’s requirements for March, April and May.’

Turkeys TMO purchases 300,000mt of US/Kazakhstan wheat for 1st-25th March shipment.

USDA on Monday projected the US farmers will plant 255.3mln acres (92mln acres of corn/57mln acres to all wheat) to the major field crops in 2011, compared with 245.2mln in 2010. This would be the highest acreage for 14 years.

UkrAgroConsult report that severe frosts, which are likely to affect the Ukraine in the coming week, could damage winter grain crops. The Agriculture Ministry reported that 94% of winter grain crops were in good/satisfactory condition compared with 90% a year earlier.

Ukraine will extend grain quotas until the 2010/11 season ends in June to avoid domestic wheat prices rising further.

As expected, the EU will soon officially suspend the imports tariffs of 12 and 16 applicable for soft wheat and feed barley respectively. This is at least until the end of June.

Another week of international tenders wasnt enough to prevent long holders liquidating their positions, as traders booked profit on worries that global demand was easing due to high prices. Fundamentals havent changed we havent found any more wheat and there are still enough weather concerns over new crop prospects, although the situation has improved in China over the past week, as snow has relieved part of the drought-stricken wheat areas. For future market movement, import demand and supply for old and new crop will remain key factors.

U.S. soybean futures tumbled to their lowest level in three weeks after five consecutive days of negative closes. Long holders have lightened their exposure to the market over the last week, in the face of improved rising soybean crop estimates in Brazil and improved conditions in Argentina. With harvests expanding in Brazil, and without a weather problem in South America, the export baton is being passed from the US to Brazil and Argentina.

Record crops are being projected in Brazil and Argentina with both countries receiving beneficial rains. Generally, South American crops are looking better, with definite signs of demand shifting to South America with Brazil’s cash prices cheaper than the US, and with the advancement of the Brazilian harvest adding to the price decline. The absence of China from the US export market, coupled with reports of the cancellation of prior purchases, is a sign that China is getting rid of some its insurance policies against potential crop threats in South America.

In Europe, the market plunged lower as Longs exited their positions leaving the Matif rapeseed market feeling rather unloved. Prices have fallen 23.25 in the week as both the fundamental and technical picture pushed the rapeseed market lower. The old crop market has been pressurised by the imminent arrival of Australian seed with the old crop crush margins really getting squeezed, thus sparking a big sell off.

We would hope that the market has had enough of a clearout now and that prices might start to find some support. Technically, the Matif rapeseed market quickly bounced off the 450 support level in the May 2011 contract and the fall in prices has helped to rejuvenate old crop crush margins back to acceptable levels, although we do think that the contract highs are in for this season.

GRAIN market information contact David Sheppard, managing director, on 01427 421222  david.sheppard@gleadell.co.uk

OILSEED market information contact Jonathan Lane, trading manager, on 01427 421222   jonathan.lane@gleadell.co.uk

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

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.