MARKET REPORT - 21 AUGUST 2008

FEED WHEAT

UkrAgroConsult raises its estimates for Ukraine's 2008 wheat crop to 22.5mmt and 08/09 grain exports to 17.5mmt, indicating wheat exports at 8.2mmt.

Kazakhstan plans to lift export ban on wheat exports on 1st September.

Indian Government looking to 'step-up' wheat sales into the domestic market to ease domestic prices.

USDA attaché indicating EU 'reaping more grain in 2008 but of lesser quality'.

US corn market firms on reports of drier weather and potential crop stress concerns. However, this is seen as bearish to wheat as the winter wheat harvest is now complete, and the drier forecast will accelerate the spring wheat harvest.

Summary
The UK market is currently being controlled by the weather as rains continue to delay the harvest. Quality and yields are holding up to the weather, however, wheat still in the fields remains open to the elements. The potential of continued rains over the next few days could start to deteriorate the crop re quality, thus producing more feed wheat. With increased reports of Black sea region and northern EU states producing more feed wheat, rallies in the market continue to provide selling opportunities.

OILSEED RAPE

The soy market has been a roller-coaster ride this week, but overall it finished higher. Weather issues and concerns over soybean yields were the major factors moving the market, along with firmer crude oil and gold.

In Europe, the MATIF rapeseed futures finished the week higher, again supported by crude oil and the rally in soy complex, however physical business in Europe remains slow with farmers concentrating on completing harvest rather than selling rapeseed.

In Canada 10% is harvested. The crop looks good so far, with early yields suggesting a crop of 10.5-10.6 mln t. To avoid a bigger carryout they will have to increase their export business.

The fact that the EU 27 has 1 mln tonnes more rape, 1.5 mln tonnes more Sunflower seed and Canada as well has 1.4 mln mt more Rapeseed (not forgetting the surplus from Black Sea) would suggest that the softseeds will have to price themselves in vs. Soy if we are to avoid a huge carryout. However if soy and crude oil moves higher it will take rapeseed / sunflower seed prices with it!

MALTING BARLEY

So far the quality of the spring barley crop is still excellent with very low nitrogen, good screenings and very good yields.

There is still barley to cut in most regions but so far we have not seen too many problems. Unfortunately the sheer volume of barley has led to a collapse in prices.

All merchants are finding harvest movement more than challenging. A much bigger winter crop and now an even bigger very wet spring crop has put huge pressure on all intakes.

Unfortunately the biggest spring barley intake has had a fire this week which has meant a loss of at least one weeks intake, further adding to the industry problems.

There is still some way to go before we know the full story on the overall supply and demand situation but at the moment everything points to a very large exportable amount.

SEED

Wheat seed prices have risen in most areas due to ongoing quality concerns as the majority of crops are still in the field.

Some of the most popular varieties are also very close to being sold out.

Very early yield results are showing Viscount and JB Diego doing very well as are Cordiale and Oakley.

OSR seed is still selling well even though the wet weather is hindering sowing.

Growers are choosing hybrids due to their better vigour and therefore early establishment.

Winter malting barley seed is also proving popular and we have a limited amount of buybacks available.

Please contact your local farm trader for details.

Activity in the Nitrogen market has fallen to a very low level as the focus has been firmly on completing a difficult harvest.

Latest indications from China are that the State Council are likely to approve the proposal to raise export taxes on fertiliser sometime in August.

The global market will then be short of Urea and the slight correction we are seeing today is unlikely to endure.

While the market is quiet and we have seen a slight " dip" in prices an opportunity exists - Gleadell have product in the UK now for spot and forward deliveries.

Internationally, phosphate prices are now static and as Latin America’s absence from the market continues prices are likely to remain so.

Ongoing industrial unrest at two Canadian Potash mines is a source of concern in an already tight international Potash market.

Blenders remain receptive to Aug/Sept business but as demand increases prices will also move upwards.