Gleadell Grains & Oilseeds Market Report -29th July

GRAIN MARKETS - David Sheppard, managing director

WHEAT

The first samples of UK wheat appear to show good quality – high specific weights, good proteins and yields not as bad as feared. However, it is early days and too soon to make any big statements, but so far so good.

There are some good premiums available for spot movement – given the good forecast until around next Thursday and wheat coming to harvest very rapidly in some regions, these may not last long.

The extremely hot weather recently experienced in the USA has broken down in a huge number of thunderstorms. Chicago markets, whilst mildly supported by some disappointing data from the spring wheat crop tour, have calmed down and are waiting for the next USDA report in August.

The standoff continues for the EU market. Farmers are still unsure as to what they have to sell and consumers are waiting to see what is available. Outside market influences - and concerns over the lack of agreement regarding the US debt ceiling - all add to the nervy nature of the current wheat market. However, it is worthwhile noting that EU wheat - at a hefty $35–40 premium over Russian - does not look particularly cheap at the moment and current prices are still good levels for farmers.

FEED BARLEY

Feed barley is trading at, or above, feed wheat due to interest from Saudi Arabia and Jordan. This business is sporadic and reliant on 60,000mt vessels normally shipped from Rotterdam, Hamburg or Dunkirk if the origin is EU. In the Black Sea, feed barley is quoted at $60 above Russian milling wheat – which is unprecedented and unsustainable.

At current parities, any consumer who does not have to use feed barley will be knocking it out of their rations, and this may even include big importers such as Jordan. A brief historical analysis tells us that feed barley prices at or above feed wheat levels do not last long and may well be a selling opportunity for farmers with feed barley to sell.

OILSEED MARKETS - Jonathan Lane, trading manager

Rapeseed harvest is well underway and we are seeing good yields across the UK. Yields from Northumberland to the south coast are certainly higher than trend yield and we could now even see a crop in excess of 2.5mln/t.

At the moment, the market has a relatively poor carry to November as there has been good nearby demand. But, after a flurry of business in the last two days, the UK crushers are getting covered and the export buyers are also becoming scarce.

If farmers keep selling at the present rate we will very quickly exhaust all the July/August demand. In fact, we are getting there now. The harvest market will really come under pressure in order to force a carry back into the market. Given the current yields these prices look fantastic and those who need to sell are advised to book something sooner rather than later.