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Market Outlook – Grains and Oilseeds, 16/02/10 Michael Archer Senior Analyst, HGCA

A detailed outlook on global wheat, feed grains, and oilseeds markets. Includes analysis of supply, demand, pricing, and implications for future trends. Insights on crop production, exports, imports, and market dynamics in the UK, EU, and worldwide.

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Market Outlook – Grains and Oilseeds, 16/02/10 Michael Archer Senior Analyst, HGCA

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  1. Market Outlook – Grains and Oilseeds, 16/02/10 Michael Archer Senior Analyst, HGCA

  2. Contents • Introduction • Wheat • Feed Grains • Oilseeds • Summary

  3. Prices decline as fundamentals dominate- good N. Hemisphere wheat & US spring crops Source: HGCA

  4. Grain demand growth despite recession- and production has responded Price Effect * Forecast Source: USDA

  5. BUT: There are underlying feed grain issues- markets more exposed to weather events Source: USDA

  6. World wheat market

  7. World Supply and Demand for wheat – another year of surplus forecast Source: USDA

  8. Main wheat exporters harvest less in 2009/10- but begin season with greater stock levels * Forecast Source: IGC

  9. UK Supply and Demand

  10. UK continues to track French wheat market- quality and exportable surplus key drivers KEY: UK follows French market Source: HGCA

  11. 1 3 UK wheat market - becoming more regionalised? More than 50% cereals 40-50% cereals 20-40% cereals Less than 20% cereals 2 4 Source: HGCA

  12. Next season – early indications, very little data currently available • HGCA/Andersons “Early Bird” Autumn planting survey – 2010/11 English wheat area seen up 5.9% • First official estimates from Defra December Survey - English data out on March 2nd, UK data on March 11th • Yields ever more difficult to predict! • Drilling went well – dry & moist across most of UK • Snow cover provided some protection from very cold weather • Strategie Grains - UK 2010 wheat crop = 16.05Mt, up 12% on 09/10

  13. World feed grains market

  14. Feed grain in 2009/10- maize deficit, barley surplus * Forecast Source: USDA

  15. Maize remains the dominant feed grain- US crop dictating volatility US maize balance * Forecast Source: USDA

  16. Demand for grain for biofuel grows * Forecast **EC forecast, March 2009 Source: USDA, Strategie Grains, EC

  17. Can the EU meet increasing demand?- good land availability: set-aside gone * Forecast Source: Strategie Grains • EU has sufficient previously set-aside land for biofuel • 1.5M ha occupied by sugar beet • Yield improvements may also be made e.g. GM maize

  18. UK barley balance sheet- massive spring plantings, highest since 2001

  19. World oilseeds market

  20. European and UK OSR values - still track CBOT prices closely

  21. World Oilseed S&D – stocks to use ratio rising for soyabeans but down for softseeds Source: HGCA/ USDA

  22. World soyabean S&D – importantly, assuming record SA crops Source: USDA

  23. Next season - soyabean & maize price ratio: important when determining future area Source: HGCA

  24. EU Rapeseed Balance Sheet – production and usage seen up

  25. UK market, production and trade – output lower but imports up sharply to date Source: Defra Source: HGCA

  26. Recap – Implications for 2009/10 and beyond • Wheat • Record 2008/09 surplus followed by likely 2009/10 surplus • Huge competition for exports in 2009/10 plus volatile FOREX • Better quality in UK should avoid major discounts, but still a follower • Feed grains • Tight (e.g. US maize), but EU barley at intervention levels • So markets exposed to an unknown supply issue in the future: volatility • Bioethanol = changing dynamics??? Oilseeds • SA soyabean crop crucial • EU OSR market looks relaxed, UK now OSR net-importer

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