Gleadell market update

FEED WHEAT

Price movement continues to be dramatic but trading volumes are low. Efficient execution of existing

contracts remain the priority for the moment. For pre-Christmas movement UK wheat remains heavily discounted to the New Year and export interest is almost zero.

Around the world US and Russian wheat continue to be bought as other origins are either not available or too expensive.

Australian wheat crop estimates remain bleak as rain has not fallen as required.

Prices for 2008/9 are following 2007/8 up and down albeit at a £40–50 discount. We believe that farmers are drilling/will drill an increased area of wheat with crop prospects of 16 mln/t or more on the cards. At this level we will have to be 'export competitive' as we will have a surplus of 2-3 mln/t.

OILSEED RAPE

Strong oil buying from the food sector combined with a much weaker £/Euro pushed rapeseed prices in the UK to near contract highs at the end of last week. However, prices soon fell back as profit taking in the US took the steam from the European market.

The Crushers have been aggressive buyers in the UK but it is worth noting that the demand for pre-Christmas seed is waning, as they appear to now have reasonable levels of cover. For those who need to move seed pre-Christmas now could be the time to commit before buyers start to discount the nearby positions. For those willing to wait, the market outlook remains good. The supply and demand, both globally and in the EU is tight with little sign of any slow down in demand.

The outlook for next year is also pretty friendly. Higher cereal prices will potentially reduce oilseeds plantings, and this combined with uncomfortably tight ending stocks and steady demand should support prices for the foreseeable future.

MALTING BARLEY

The world's Brewers are short of malt and needing to buy. The Maltster is unwilling to sell any more malt until he has bought the barley. This is proving difficult.

The last 20% of the Canadian barley crop is now confirmed as feed. Whilst in Australia the dry weather continues, with some pundits now forecasting a barley crop up to 3mln/t down on early estimates. This is causing further worries for the world's buyers.

In the EU we continue to have difficulties with high nitrogen on delivery. Prices remain firm especially after the New Year.