EU Wheat Rises As Chinese Grain Stocks Get Questioned

Posted by Nogger - a legend in his own mind at 16:26 | Categorized as

23/03/12 -- EU grains finished higher with expiring Mar 12 London wheat going off the board unchanged at GBP175.00/tonne. Other old crop months were GBP2.25/tonne higher, with new front month May closing at GBP172.50/tonne. New crop was GBP2.40 to GBP2.60/tonne firmer. May 12 Paris wheat closed up EUR3.75/tonne to EUR214.00/tonne.

The week overall weekly performance was flat with May 12 London wheat unchanged and May 12 Paris wheat up EUR0.25/tonne.

It's shaping up to be another interesting year. Although not exactly fresh news, the size of China's grain stocks have perhaps never before been doubted quite so openly as they are being at the moment.

According to the USDA, at the end of 2011/12 China will be sitting on 22% of the world's soybeans, almost 30% of the world's wheat and 47% of it's corn stocks. Is it all really there, and how would the market react if it knew that it wasn't?

Eager to take advantage of any global shortage, US farmers will plant a modern day record 95.1 million acres of corn this spring, say Farm Futures magazine - which is 1.1 million more than the USDA suggested last month. They see soybean plantings at 76 mill acres, 1 million more than the USDA said and all wheat sowings at 56.7 million which is 1.3 million less than the USDA forecast in February.

High soybean and rapeseed prices will encourage Canadian growers to plant a record 21 million acres of the latter this spring, according to Oil World. That's an increase of almost 12% on last year for the world's largest exporter of rapeseed.

Ukraine will plant a record corn area this spring, also looking to cash in on high prices. Any crop losses in Western Europe to the February freeze and/or winter drought will also spawn increased corn plantings here. Will we get the rain though, that's the question?

In fact that's only one of a number of questions. European debt is a far from sorted issue, how is that going to pan out in the remaining three quarters of 2012? Will there still be an EU-27? Could anything else come from off field to spook the funds into packing up their bat and ball and looking for something a bit safer and less volatile than the markets we find ourselves stuck with?

In other news, Brussels issued 440,000 MT of soft wheat export licences this past week, 38 weeks into the marketing year. That was the second best total since week 19, even so exports are more than a third down on where they were a year ago.