Gleadell Market Update

FEED WHEAT by David Sheppard. Telephone 01427 421222 or email david.sheppard@gleadell.co.uk

“The last week can only be described as a very quiet market; with thin volumes trading, new crop futures are unchanged from the close of last week with some consumers still sitting out of the market, and many others just looking to execute business for the final month of the old crop season,” says David Sheppard, managing director, Gleadell Agriculture.

“There is little fresh news to influence the market which will look towards tomorrow’s USDA report for some direction, where an update on the world supply and demand will be published.

“Old crop supplies remain plentiful and, unless export figures for May and June come in somewhat higher than expected, there will be an increased carry out from the latest DEFRA figures on UK supply and demand. With new crop just a few weeks away this will continue to weigh on the market, unless any weather problems create a delayed window prior to new crop supplies becoming available.

“Egypt’s state grain buying agency, the GASC, has once again been in the market for wheat for August shipment. In their tender yesterday they once again ignored cheap Russian offers due to an ongoing quality dispute, and instead purchased 155,000 tonnes of French and US wheat.

“Harvest continues to press on in many parts of the world, with much of the US winter wheat area now harvested. Barley harvests in southern France and other parts of Europe also continue with positive yield and quality being reported.

“Currency has played a supportive role to the UK wheat market with Sterling having lost some of its recent gains against both the Euro and the US$. The Bank of England Monetary Policy Committee are meeting with views on extending the quantative easing programme. This could have a somewhat negative influence on Sterling, but long-term views are still for sterling to recover.

“Harvest pressure around the world and the weight of the old crop surplus still continue to weigh on the market, and any weather related spikes in the market will provide a useful selling opportunity for people with remaining old crop surpluses, and those who need to move as available wheat at harvest,” Mr Sheppard adds.

OILSEED RAPE by Jonathan Lane. Telephone 01427 421222 or email jonathan.lane@gleadell.co.uk

“CBOT soy posted sharp losses this week with fund selling, better crop weather and the influence of outside markets driving prices lower. Fundamentally the old crop soy situation in the US is ridiculously tight and with this week’s crop ratings report suggesting that new crop could be up to two weeks late. The supply situation for the next eight weeks isn’t going to get any better. The US still has the planted area to produce the biggest crop on record but this will be entirely based on the weather between now and harvest. If the US experiences an El Nino event and hot dry weather effects the potential of the US bean crop, the market has no slack in the system and the need to ration demand could, but it is a big ‘could’, see prices rocket higher. In the meantime the next big focus will be tomorrow’s USDA supply and demand report,” says Jonathan Lane, Gleadell oilseed rape trader.

“In Europe the rapeseed market remains a follower – prices ended the week sharply as crude oil continues to slide (it’s now under US$61/barrel) and the soy market crashed lower. Harvest is now well underway in the Ukraine, but as the pace of harvest is somewhat slower than last year, with approximately 20% cut to date, and average yields considerably lower than last year. In contrast, the early yields in France are good and the first cut crops in southern Germany have been described as average.

“The market is really still in a rather confused state, the global oilseeds complex remains tight, even with the potential for a record US bean crop. Demand for vegetable oils seems to be holding up, despite the global recession but, for the time being, a combination of some harvest selling pressure in Eastern Europe and the influence of outside markets have driven prices lower,” Mr Lane adds.