FEED WHEAT

•     This week has seen the wheat market firm. Dry weather in the US and western Australia, wet weather in eastern Australia, lower new crop plantings, new crop ratings and currency movements have all been factors this week.
•     Wheat has had a 5-day rally in Chicago as dry weather across the Midwest threatens the winter crop plantings and emergence. The USDA’s first crop rating report this week was the lowest rating in 15 years at 47%, down from last years 62%. It is interesting to note however, that the second and third ‘worst’ rated beginnings went on to produce high yielding crops.
•     Wheat/corn spread in Chicago hit lows at the end of last week of 104c/bu on the December position. The switch out of corn to wheat has been slower than expected and the spread today (30th) has widened to 132c/bu.
•     The bullish news continues on winter plantings in Europe with Ukraine reporting sowings to be down 7% and Russian hectares falling to 13mln/t, which is 25% down on initial Government forecasts and 5m/mt down from last season.
•     Overall interest in new crop wheat has increased this week with the November 2011 contract on LIFFE the most traded. Consumers are also showing some signs of life on the new crop as the discount to this year continues to narrow. With the pace of UK exports this season, only a moderate increase is expected in UK wheat plantings for next season and demand from two biofuel plants the old/new crop spread could continue to narrow.
•     EU export licenses up until the end of last week have reached 621,000mt for soft wheat. This takes the season total to 7.7mln/t, 2mln/t more than the same period last year. Barley exports are also sharply higher; up to 1.8mln/t from 298,000mt across the same period last year.
•     Ukraine red tape on exports continues as the Government ‘officially’ requested that export licenses be auctioned. There are also discussions going on between Russia and the Ukraine over a 2mln/t milling wheat/maize swap. This tonnage will not be included in the export quota for the Ukraine.

FERTILISER

• Another major Urea tender, which closed on 27th October in India, will help set the direction of Nitrogen values for November and December.
• Also, the Chinese are rumoured to be in the process of changing its export taxation system on fertiliser. If the higher taxation period is extended this will further restrict the flow of Chinese product on to the market helping to support prices from other destinations.
• Following price rises in France, GrowHow and Yara announce new November Nitrogen terms in the UK.
• Lithan Ammonium Nitrate remains a very good buy in comparison but new prices at the factory gate are now being quoted for January, which reflects the tightness of Nitrogen in Europe.
• Stronger grain prices will likely result in a significant increase in winter wheat sowings, which will lead to a greater NPK demand for spring 2011.
• The advice remains buy today, as the revival in grain prices will continue to support higher fertiliser prices.