Gleadell market update
FEED WHEAT
The old crop wheat market is being supported by a very active French export campaign some business is being switched to the UK out of Rouen as the port is at capacity and by a weak Euro, says David Sheppard, managing director, Gleadell Agriculture.
Importers have been stocking up on old crop supplies of known quality, e.g Algeria bought 500k of July wheat from France.
In the UK, exports are running at the rate we expected and we remain on target to have a sizeable carry out of 2.0mln/t at the end of the season.
US prices remain pressured as a strong dollar; weaker oil prices and good corn planting progress are all price negatives.
In Europe, the new crop picture is a bit confused. French and UK crops need some rain in the near future the French say that they need rain sometime in the next three weeks to alleviate concerns, while German crops are in good condition.
Ukrainian crops are ok but the weak Euro is making potential Ukrainian imports more expensive.
Spanish crops have had masses of rain and the harvest is two weeks later than normal; i.e. in the south they normally get new crop around 20th May and it is going to be early June before harvest begins.
Spanish grain production is set to rise by 4mln/t versus last year mainly comprised of 2.6mln/t more barley and 1.3mln/t more wheat. This means their import demands will be commensurately lower not good for the UK when they normally take 50% of our surplus. The fundamentals of the world market remain bearish but are complicated by spot demand in France, a weak Euro/Sterling versus $ and a dry period of weather in NW Europe. Incidentally, in Eastern Europe it is raining – plenty!
Farmers have tricky decisions to make for 2010 prices in the context of the above information, and it is worth noting that 2011/12 prices at roughly 10 per tonne more are worth consideration too. If the Euro/Sterling stages some sort of recovery versus the Dollar, and if the market thinks that the crop is made’, then todays prices may represent good value, Mr Sheppard adds.
OILSEED RAPE
US reported soybeans plantings at 38%, against 23% last year and 35% average. US futures are caught between good spot domestic demand and prospects for large US and South American crops, says Jonathan Lane, Gleadell trading manager.
US beans are 20c/bushel down on the week, with soyoil 50 points lower, pressured by weaker crude prices.
Chinas Ministry of Commerce estimated soybeans imports during May at 4.8mln/t, lower than the estimate released last week from CNGOIC AT 5.2mln/t.
Rain and snow in Central China have reportedly damaged Chinas rapeseed crop prospects, with an analyst projecting the crop at below 10mln/t, against the current USDA forecast of 13mln/t and 13.2mln/t last year.
EU prices have been mainly influenced by currency movements and crude oil values, with the MATIF future price unchanged on the week.
Demand is limited in the near term, as shorts look to cover requirements, with crushers not aggressively looking to extend new crop positions.
In summary, EU markets will be influenced by currency, crude oil values and external factors. Old crop is over bar the shouting, with the emphasis now being switched to new crop and impending weather concerns, Mr Lane adds.
For further information contact David Sheppard, managing director, on 01427 421222 david.sheppard@gleadell.co.uk
Jonathan Lane, trading manager, on 01427 421222 or email jonathan.lane@gleadell.co.uk
1) Prices quoted are indicative only at the time of going to press and subject to location and quality.