FEED WHEAT

•       Statistics Canada sees 2010 all-wheat production at 23.17mln/t, up from 22.2mln/t previously, boosted by good weather and recovering crops - but still seen as the smallest wheat crop in the past 3 years. 
•     Drought conditions seen affecting 17% of China’s winter wheat growing area (3.87mln hectares), with the dry weather forecast to extend until spring next year, the Government reported. 
•       Pakistan is to allow the private sector to export 1mln/t of wheat, lifting a 3-year ban after a bumper harvest. 
•     Heavy rains will leave more than half of the milling wheat on Australia’s east coast facing a downgrade to feed quality. Growers, already well behind with harvest, face further disruptions with more rain in the forecast. 
•       ABARE sees Australia ‘heading towards a record wheat crop of 26.8mln/t, but heavy rains have hit quality. 
•       Argentine Government has authorised the export of another 2mln/t of 2010/11 wheat as harvesting advances. 
•      Ukraine’s Government extends its grain export quota, due to end on December 31^st, until the end of March 2011.  The draft resolution proposed additional quotas for the exports of 500,000 tonnes of wheat and 1mln/t of maize. 
•     Officials report 54% of winter crop sowing in good condition, 38% satisfactory condition and 8% showing weak and thinned condition – General winter area is reported at 8.2 million hectares. 
•      French farm office AgriMer, raises its forecast of non-EU wheat exports during the current 2010/11 season to a record high of 11.6mln/t. The office also lowered its forecast of soft wheat ending stocks to 2.15mln/t (3.4mln/t in 2010).  In its first projection for grain sowings for the 2011 harvest, AgriMer estimates soft wheat area at 5.04mln ht, up 2.3%. 
•      HGCA study reports the UK 2011 wheat crop could rise 4% to 15.5mln/t, due to increased area and hopes for better yields. Predictions for lower winter barley plantings are expected to lower next year’s production. 
•        Markets continue to firm with Chicago up 44.5c/bushel on the week ($16 or approx £10) as increasing concerns over the supply of ‘milling wheat’ intensifies. The potential down-grade of at least half of the eastern Australian wheat crop to feed grade, the extension of Ukrainian export quotas, and still-lingering weather concerns relating to new crop prospects (dryness in the US / China and now the Middle East) have supported higher values at all major exchanges. 

Tomorrow will see the USDA update their US and Global S&D estimates, with traders expecting few changes, except for a possible rise in projected US wheat exports as supplies from competing origins continue to dwindle lower. 

OILSEED RAPE 

•    The story on rapeseed is getting a bit monotonous, but at least we are bearers of good news as yet again the market is sharply higher again. 
•    Soybeans continue to be supported by strong Chinese demand and weather concerns in South America, but it is the European rapeseed complex that is really flying. The tightness of supplies and good crush margins in Europe has consumers clambering over one another to secure ownership of physical seed and this, at the time of writing, has pushed the Matif rapeseed futures market up €25.50 in this week alone! 
•    The strength of sterling has taken some of the shine off this rally for UK farmers, but £400/mt ex farm will now be achievable for old crop rapeseed (before bonuses) in some parts of the country. 
•     New crop prices have rather lagged behind, with all the focus on the supply issues in the old crop market, but there has been some spill-over support and gross margins for new crop rapeseed prices look really good compared to all other commodities. 
•    We have the latest USDA Supply and Demand report tomorrow which is expected to be friendly to soy, but one never really knows what might come out of the USDA. However, as long as we don’t get any surprises tomorrow, the market still looks well supported.

FERTILISER

• Urea prices remain firm. In the US where they are still playing catch up, values have firmed almost $20 over the last week. 
• Egyptian manufacturers have rejected further December bids and are almost sold out. They are expecting to post higher values for Q1 2011 sales. 
• In the UK, the Urea market is quiet, but this product is still the most cost effective Nitrogen product so will be viewed by many as the best first dressing option. 
• We expect demand will pick up as January approaches. 
• December allocations for UK Ammonium Nitrate are almost complete. January terms are £310 delivered. 
• Lithuanian AN is available, guaranteed to spread 24 M by SCS. This should be considered as a replacement for UK product.