Jonathan Lane, Gleadell’s trading manager, comments on markets:
Wheat
All markets came under some degree of pressure following last Friday's USDA report, but have consolidated to some extent as this week has progressed.
US wheat prices are still priced above EU (French) levels in international tenders, whilst only the odd cargo is available in the Black Sea - which is effectively sold out of wheat - and we now await the outcome of the Southern Hemisphere crops - especially in Australia.
In Europe, many market participants heard a bullish market analysis for Corn (maize) from Dan Basse, President of agricultural analyst AgResource, at the Global Grain conference in Geneva.
His analysis is based on the large demand for feed grain in Europe and it is certainly true that maize imports will have to counterbalance a shortage of feed wheat as almost all EU wheat, except in the UK and Ireland, is of milling quality.
In the UK, Ensus have announced that they will be blending maize with UK wheat at a rate of 20pct to 30pct of their total requirement due to lower starch yields from the poor quality of this year's UK wheat crop.
With imports carrying on at a pace that will result in a season total of close to 2.5 mln t, it looks more and more likely that, at some stage in the New Year, the UK will have a tonnage of lower than 72kg wheat to export. Currently, there is little or no interest in this sort of material - certainly not at anything like UK domestic prices.
So we will have to rely on the 'something will turn up' factor to change this situation.
The drier weather we have seen this week has resulted in drilling recommencing which is good news after the wet miserable weather of the last month. However, we still expect UK winter wheat plantings to be down versus 2011, and consequently the spring area of barley, wheat and pulses will be higher than anticipated.
Oilseeds
The week started on a negative tone following the USDA report which resulted in 111mln bushels (3mmt) being added to the soybean production figure.
The soybean market sold off sharply on the back of this news and continued lower in the early part of the week with MATIF rapeseed following soybeans lower.
Both soybeans and rapeseed have retraced slightly towards the back end of the week, but an underlying negative tone exists. Technical factors and a poor macro-economic outlook are superseding the tight supply and demand fundamentals in beans. Export sales and crushing for soybeans remain above forecasts, but this is having a limited effect on price at present.
Domestically, UK rapeseed prices have eased slightly this week, with MATIF rapeseed trading lower in sympathy with soybeans. The Euro has rallied against GBP which offers some support to domestic prices. The UK and European markets remain quiet with little coming forward from farm.
The macro environment continues to offer some uncertainty for investors with the Eurozone falling back into recession and the US facing various fiscal adjustments.
