Grains and Oilseeds Market Report - 8th February 2013

Jonathan Lane, Gleadell’s trading manager, comments on grain markets:

Wheat

Mild weather carries no immediate threat to Ukrainian winter crops.

Kazakhstan ups 2012/13 grain export forecast to 7.8mln t.

Indian government may consider allowing more wheat exports – huge stocks due to bumper harvests.

Brazilian government raise corn output forecast to 76mln t from 72.2ml t previously.

Weather concerns cut hopes for Argentine grain crops.

Canadian all-wheat stocks pegged at 20.7mln t – below trade expectations.

Russia approved proposal to remove 5% import tax – may be removed early April until July 1st.

Brazil exempts 1mln t of wheat from import tariff outside of the Mercosur trade block – may increase volume.

The market, in the face of no real bullish news, has followed the path of least resistance – i.e. lower. The UK market is facing the prospect of having to find an export outlet for a few hundred thousand tonnes of low quality wheat, and that reality is starting to be a real dilemma – especially for co-ops in the south who we hear have large volumes of low spec wheat in store – and no buyers.

Oilseed Rape

Matif May13 rapeseed has remained relatively unchanged this week, trading in a small range between 465- 470 euros that equates to circa £385-390 ex farm for most areas. The crush remain keen to buy nearby months and the export market has also seen some activity with UK seed trading into European destinations.

The Euro remains firm against Sterling, or at least it did until today, when Mr Draghi’s comments knocked 2 euro cents off the single currency’s value. However, a weaker £ helps to support domestic markets but we do have important fundamental factors on the horizon such as the Italian elections, the current Spanish political situation and Cyprus requiring a bailout.

The Winnipeg Canola market and the US soybean market have also remained relatively unchanged throughout the week. We have seen some position squaring ahead of Fridays USDA report and also some reports of needed rainfall in Argentina. The Brazilian agricultural ministry have raised the soybean crop to 83.4mln tonnes from 82.7mln tonnes, soybean export and crush demand remain strong.