Gleadell Market Report

GRAIN MARKETS – David Sheppard, managing director

WHEAT

Spring plantings in Russia and the Ukraine are reported as being delayed by wet and cold weather. The same happened last year.

Crop conditions in some parts of the US Midwest and in Canada are not ideal.  The Midwest has been too dry and Canada is wet and cold.

The USDA will issue its plantings report at the end of the month which fundamental traders (nearly an extinct breed) will use to set the market tone for the spring and summer.

Strategie Grains estimate the 2011 EU wheat crop at 135.2mln/t versus 126.4mln/t in 2010.

The latest official figures for UK wheat exports shows a total of 2.1mln/t by the end of January. We expect exports to continue, not just for this season but also well into the future, and to remain as an important market for the UK.

Reports in the press this week say that the bioethanol plant near Hull, which was expected to start production in mid 2011, has been delayed.  As a result, the UK supply and demand situation may not be quite as tight as previously thought.

Grain markets have reacted violently to mostly non-grain events over the past week. The possibility that Japans earthquake-induced nuclear problems is getting out of control, and the fear of risk contagion in world financial and commodity markets, induced another flight to safety by the funds, and markets moved in a wild fashion that had nothing to do with grain fundamentals.  This looks likely to continue and predictions of the next move are almost impossible to make.  However, it is true that Japan is the worlds largest importer of corn (maize) and, whilst this core demand is not going to disappear, there may well be severe disruption in ports and inland logistics.

Unsurprisingly, we have started to see some consumer demand with the market 35 off the old and new crop highs, but we continue to hear reports of falling livestock numbers and lower demand from that sector.

OILSEED MARKETS – Jonathan Lane, trading manager

The rapeseed market has crashed lower this week with UK ex-farm values down 40/mt on the week. This was prompted by the collapse in the Matif rapeseed futures market as speculators and trading houses alike panicked out of the market following the catastrophe in Japan and the civil unrest in the Middle East.  The earthquake and subsequent tsunami in Japan sparked one of the biggest sell offs in the Japanese stock market for 20 years, with 10% wiped off the value of the Nikkei in the first trading session following the re-opening of their financial markets.  The uncertainty created by this crisis was the catalyst behind the global sell off in commodities as the market shunned the underlying bullish fundamentals and fled for the exit, wiping billions of dollars from all markets on Monday and Tuesday this week.

However, whether this is the start of the end for the bull-run on commodities remains to be seen. Last night saw US soybean futures finish higher as the market clawed back earlier losses as the market found support from the rebound in Japanese equities helped open the door for gains in agricultural commodities. Soybean traders started to refocus on the fundamentals, citing an official estimate reducing China’s 2011 soy acres plantings by 11% and reports of rains in Brazil disrupting harvests and delaying loadings of soybean supplies for export, as a reason to start buying again.

In the UK, Sterling has weakened considerably as money continues to flow out of the GBP and the US$ and into the Yen as speculation remains that the Bank of Japan will be forced into the currency markets to recover as much wealth as possible to help re-build the country.  Clearly the weaker should help to prop up UK farm gate prices and the market feels like it ought to consolidate now. If we start trading the fundamentals again we should see prices start to recover but, if the funds hit the sell button again, goodness only knows which price level we could fall to. In short, we are in very dangerous times these prices are still good for farmers and, whilst the market really ought to go back up again, we cant legislate for any major global economic issues.

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

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

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. 

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

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

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