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

Market Outlook – Grains and Oilseeds, 16/02/10 Michael Archer Senior Analyst, HGCA. Contents. Introduction Wheat Feed Grains Oilseeds Summary. Prices decline as fundamentals dominate - good N. Hemisphere wheat & US spring crops.

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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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