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Gleadell Market update

GRAIN MARKETS – David Sheppard, managing director  

WHEAT 

The IGC forecasts a record global grain crop should be harvested in 2011/12 but stocks are still likely to fall from already low levels. Grain production in 2011/12 is forecasted at 1,805mln/t, up from 1,726mln/t in 2010/11. However, it would still remain just short of the projected consumption of 1,808mln/t. 

 

Coceral sees EU-27 2011 soft wheat production at 131.44mln/t, up from 127.05mln/t in 2010. 

 

The Russian government has sold 808,709 tonnes of grain from its intervention tenders launched this year to contain price rises after a severe drought reduced the countrys grain output by 30% to 60.9mln/t. The Russian agriculture minister reported that the country wont lift its ban on grain exports any earlier than the end of September or October, when the 2011 grain harvest should be known. 

 

Ukraine extends grain export quotas until July 1st, and increased the maize quota from 2mln/t to 5mln/t. 

 

India could decide next month to lift a 4-year ban on wheat exports, but analysts report the government may lack the political will for such a move as they struggle to reduce internal food prices. 

 

USDA today reported US farmers would plant 92.2mln acres to corn, 58.0mln acres to wheat and 76.61mln acres to soybeans. The corn and wheat figures were higher than trade expectations. However, lower than predicted corn and soybeans stocks provided immediate and significant  support, especially on the old crop positions. 

 

In summary, old crop supplies of quality wheat, corn and soybeans remain tight, confirmed by the USDA numbers released today. Market fundamentals still remain bullish on the tight stock position, and this will place greater emphasis on the record global grain production forecasted for 2011. This record production is essential to keep stocks constant and any future threat to the supply side of the balance sheet will encourage increased buying activity. 

 

 

 

 

OILSEED MARKETS – Jonathan Lane, trading manager 

 

The release of todays USDA ending stock and plantings report has ignited the US corn and soybean markets. The 2011 prospective plantings were in line with expectations but the 2010 ending stock report cut 15% off corn and 2% off soybeans, tightening the already squeaking balance sheets even further and prompted another sharp jump in prices.  

 

In Europe, the rapeseed market had been creeping slowly higher driven by short covering in the old crop futures market. The open position in the May contract is still 1.3mln/t, against which those short of futures will either have to make deliveries of physical rapeseed or will have to buy back their position on the futures market. Given the tight nature of the supply and demand balance sheet within the EU the long holders have the upper hand. Until the release of the bullish USDA figures, it had really been this technical situation in the May rapeseed futures contract that had been driving the market as crush margins have really come under pressure in recent weeks. 

 

The short-term outlook would suggest that prices ought to stay underpinned, as concerns about the developing European crop will keep sellers on the back foot. This market remains very volatile and these prices are still really good for farmers and we think it is prudent to sell small tonnages as prices move higher. 

 

 

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.

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