Gleadell Market Report

GRAIN MARKETS – David Sheppard, managing director

WHEAT

The USDA reports that US farmers are likely to plant 92mln acres to corn this year, up from 88.2 last year. However, the USDA also reported that plantings will likely fail to refill stocks enough to quell the surge in price.

CWB sees Canadian 2011/12 all-wheat crop at 23.8mln/t, up 3% from the 3-year low of 23.2mmt harvested last year.

ABARE sees Australian 2011/12 wheat production down from this years record, at 24.3mln/t despite an increase in plantings.

Russia expects to import up to 1mln/t of grain this year, less than the 3mln/t previously forecast by the government.

Conditions for Russian crops are not as favourable as thought, with patchy snow cover in key areas and seed, finance and fertiliser in short supply for spring sowings.

Russia may extend its ban on grain exports until the end of the year, reported the Deputy Prime Minister.

Hydro Meteorological Center reported Ukraines winter crops survived the winter month satisfactorily, with damaged crops reported on less than 10% of the total planted area, with moisture content in the soil sufficient all over the Ukraine.

Rain and snowfall dispels worries of drought in China, although the wheat area affected by drought in eight major producing provinces is still reported at 5.71mln hectares, with 1.04mln hectares still reported as being severely drought-hit.

Spanish winter cereals plantings down 1%, as seen by the Agriculture Ministry, although soft wheat plantings seen up 1.6%.

Saudi Arabia purchases 275,000 tonnes (US/Brazilian) wheat, next tender seen in June. Saudi seen boosting wheat reserves to create a buffer against an expected global spike in food prices, has a wheat reserve to cover six months.

The HGCA reported that supplies of UK wheat look set to become very tight towards the end of the 2010/11 season in June, raising the prospect of increased imports or demand rationing and also that the stocks-to-use ratio for wheat could fall to a record low.

Markets remain delicately poised with tight season ending stocks of wheat in the EU, and corn in the US, balanced against the prospects of record US corn production, larger global wheat production, and the potential of further fund selling as well as increasing reports of pig and poultry de-stocking.

The current political/civil unrest in Libya and other North African countries could dampen demand, although sales to these regions have been concluded over the past weeks. The USDA corn planting number, albeit well above last year, is seen by many -and confirmed by the USDA – not to be a stock replenishment acreage even using trend yield of 161.7bu/acre. This fact will be closely monitored by traders, especially if any adverse planting/growing issues become apparent over the next few months.

OILSEED MARKETS – Jonathan Lane, trading manager

After the crazy markets of last week things have stabilised this week with the US soybean market re-gaining a significant proportion of last weeks losses. Strong underlying demand combined with concerns that rains delays in the Brazilian soy harvests will bring more demand back to the US. Also, the continued competition between corn and beans for acres in the spring are also underpinning new crop prices. Outside markets influenced price direction as well, with another rally in crude oil futures above the $100 a barrel level attracting investment fund buying.

In Europe, the soy market, but more importantly the crude oil market, has lent support to the European rapeseed complex as etherification margins for the bio-diesel guys have jumped higher which, in turn, has stimulated demand for vegetable oil and have further bolstered what are already good margins for the new crop.

After the madness of this week, it does feel like that the market has settled down again and is beginning to refocus on the fundamentals. The market is beginning to feel supported again and prices could well move higher, but we still feel that caution is the watchword for the market.

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

Press queries or for further Gleadell contacts, call Ahead PR on 01904 634040 mail@aheadpr.eu

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.