GRAIN MARKETS -
David Sheppard, managing director
As we end 2010, world wheat futures have rocketed to contract highs as the weather, in its many forms, continues to tighten the supply and demand situation for Corn, Wheat and Soyabeans in Russia, Australia, North and South America, China and in the EU. The amount of the 2010 UK crop left unsold is small, possibly 10 to 15% and, therefore, marketing decisions are more about movement and cashflow than about price.
For 2011, prices are very attractive for farmers and no one can be called anything but sensible by selling some tonnage forward. Also 2012 is now well worth looking at too – for all commodities.
As a side note, last week DEFRA increased the UK 2010 wheat crop size to over 15 million tonnes. Our view is that this is an overstatement of the crop, and it certainly does not feel like a 15 million tonne crop.
UK exports have continued at a rapid rate since August and Gleadell have played a leading role in this important market, as well as trading a record tonnage in the UK’s domestic market. We have shipped over 550,000 mt of cereals, oilseeds and pulses since July 1st 2010 and we have loaded two 25,000 mt cargoes of UK milling wheat to Tunisia – a first for us.
Cargoes have also been shipped to Egypt, France, Morocco, Ireland, Germany, Greece, The Netherlands, Denmark, Mauritania, Denmark, Spain, Italy and Portugal – to name a few – and these have been loaded in Immingham, Grimsby, Kings Lynn, Ipswich, Dover, Southampton and Avonmouth as well as shipping 120,000 mt from our new facility in Great Yarmouth. [SEE ATTACHED AERIAL PICTURE OF GLEADELL GRAIN SHIP LOADING AT GREAT YARMOUTH]
The future looks fairly rosy at the moment, and we certainly welcome the growing bio-ethanol sector as it becomes a significant part of the UK market – but we remain convinced that the export market will continue to play a significant role in our market in future years. Those who are currently being tempted to commit grain solely to the bio-ethanol market are well advised to keep all their options open – and to see what each season brings us and which market opportunities best suit them as they appear.
OILSEED MARKETS - Jonathan Lane, trading manager
This week has seen another push higher in the value of all commodities with wheat, metals and crude oil all up sharply. Unsurprisingly, the star performer of the week has been rapeseed. Prices on the Matif rapeseed futures are up €17.50 on the week and an impressive €55 since the start of December! These high prices have, of course, been aided by the rally in the other outside markets, but the fundamental tightness of the supply situation in Europe - combined with the good processing margins for the crushers - is the key driver.
Crush margins in Europe remain very healthy and this is encouraging processors to continue to operate at maximum capacity but, given that there is simply not enough seed available, this rate of processing is not sustainable.
The market needs to cut these crush margins and higher seed prices seem to be the only way to do so. However at the moment the rally in the vegetable oil and rape meal markets are keeping pace and so, for the time being, the market does not look like it is coming down.
