FEED WHEAT 

·     The USDA report released last Friday produced little surprise on the corn report, as the yield was reduced much in line with trade expectations.  Production was lowered, although still at a record 334.3mln/t.  Stocks, however, were projected at their lowest level since 2003/04 and the stock-to-use ratio was projected at just 9%, the lowest since 1995/96. 

·     US corn harvest is 11% complete with yield reports at present being described as ‘disappointing’. 

·     USDA reduced World wheat production to 643mln/t, down from 646mln/t the month earlier. Projected stocks were increased by 3mln/t to 178mln/t, mainly as a result of a larger carry-in stock and reduced usage. 

·     ABARE sees the Australian 2010/11 wheat crop at 25.1mln/t, up 14% from its previous forecast (21.7mln/t in 2009/10). 

·     India likely to aim for record wheat output of 82mln/t this crop year ending June 2011, helped by good rainfall and climbing water reserves. A rise in production may encourage the Government to lift a 3-year wheat export ban. 

·     Egypt’s GASC purchases 295,000t of wheat (55tmt US, 60tmt Canadian and 180tmt French) for November shipment due to Russia’s export ban on grains.  GASC has purchased 1.65mln/t of French, US and Canadian wheat since July 1^st. 

·     Ukraine’s Agriculture Ministry sees 2010 grain crop at 38mln/t, down 3mln/t since last estimate – wheat projected at 17.1mln/t. 

·     Strategie Grains for the third straight month, cuts its estimate for EU-27 soft wheat production to 127.2mln/t, 1mln/t less than last month, citing lower crop forecasts for the UK, the Baltic States and Central / Eastern Europe. 

·     England’s wheat crop will be about 13.5mln/t, some 400,000t below the 5-year average as low rainfall hit yields – NFU. UK wheat exports during July 2010 were 251,733t, up 52% on July 2009. The Netherlands was the primary destination with 78,060t being shipped, followed by Spain at 50,366t. Non-EU exports were 58,314t, one shipment to Vietnam. 

·     In summary, the bullish US corn report and reports of disappointing corn yields (early stages of the US harvest) has encouraged buying interest in the Chicago corn market, dragging wheat higher.  While the Global wheat report reiterated the fact there are plenty of wheat stocks available, the milling versus feed debate will rumble on, with continued purchases of French, US and Canadian wheat by Egypt keeping the quality markets underpinned. 

OILSEED RAPE 

·     After all the volatility and excitement we have seen in recent times, the European rapeseed futures market has been pretty flat this week. 

·     Last Friday’s USDA report was pretty bearish to soy, with yields forecast to show some small increases, directly opposite to what the market was expecting, and prices in the CBOT soy complex fell as a result. The bearish tone filtered through to the European rapeseed market and prices eased lower during the week but failed to really break down as the underlying fundamentals continue to support the market. 

·     Despite the weaker Matif futures market, the weaker £:€ has helped to lift UK farm gate prices as disappointing house price data has undermined Sterling.  The quietness in the market has been added to by the lack of first hand sellers in the market as most farmers seem to be out on the land busy drilling next year’s crop and, to our mind, this is what farmers should be selling.  Current prices for next season represent excellent gross margins on paper and, with the UK forecast to increase plantings to all time record levels, it would certainly seem prudent to sell at least a percentage of next year’s production at the levels that are currently available.