EU Wheat Falls On Rain And US Price Declines

Posted by Nogger - a legend in his own mind at 17:18 | Categorized as

04/04/12 -- EU grains finished mostly lower with May 12 London wheat falling GBP2.50/tonne at GBP169.50/tonne - the first time it has closed below GBP170.00/tonne in three weeks. New crop months were GBP3.50/tonne lower and May 12 Paris wheat fell EUR2.25/tonne to EUR209.25/tonne.

The market followed US wheat lower, knowing that EU prices are already at uncompetitive levels relative to American origin. Based on last night's closing levels May 12 Chicago wheat was the equivalent of USD242.00/tonne, compared to USD273.50/tonne for London wheat and USD279.00/tonne for Paris wheat.

Widespread rain (and snow) across much of the UK, and some parts of France and Germany too, will have eased drought fears.

The EU Commission forecast EU-27 wheat production in 2012/13 at 139.9 MMT, 3 MMT higher than last year, and more than recent estimates from Copa Cogenca (137.2 MMT) and Coceral (134.6 MMT).

The Commission see a 2 MMT cut in animal feed usage in the coming season. Demand from the bioethanol industry is only seen rising 0.2 MMT following Abengoa Rotterdam's switch to using corn as a feedstock as opposed to wheat.

EU-27 2012/13 wheat ending stocks are seen rising by a third to 13.9 MMT.

They are also relatively bullish on rapeseed production prospects compared to Copa Cogenca and Coceral, estimating the 2012/13 crop at 20.4 MMT - although that is still 2.5 MMT below domestic usage.

In international news Jordan bought 50,000 MT of wheat of unspecified origin in a tender today. Iraq is tendering for a minimum of 50,000 MT wheat, although it usually buys more, last time round Canadian wheat got the nod.