EU Grains Close

14/06/12 -- EU grains finished mixed with Jul 12 London wheat ending up GBP0.85/tonne to GBP174.75/tonne, and new crop Nov 12 ending GBP0.30/tonne higher to close at GBP155.80/tonne. Aug 12 Paris wheat - in which there is only a thimble full of open interest - was unchanged at EUR205.25/tonne, whilst Nov 12 was also unchanged at EUR206.00/tonne. Other new crop months were between EUR0.25-1.25/tonne lower.

Strategie Grains increased their forecast for the 2012 EU-27 soft wheat crop by 1.5 MMT to 124.2 MMT, citing improved crop conditions, particularly in Western Europe.

France had it's crop increased by 0.9 MMT and Germany's was upped 0.5 MMT. With EU-27 durum output also seen 0.3 MMT higher than last month at 7.9 MMT, that gives us an EU-27 2012/13 all wheat crop of 132.1 MMT, which is 1.1 MMT more than the USDA projected on Tuesday.

The early durum harvest in Spain and Italy has produced some good quality wheat, they said.

Wheat export potential was increased by 2 MMT from last month to 13.5 MMT, but despite that the extra production and reduced feed usage means that 2012/13 ending stocks were also raised slightly.

The improved European weather conditions are also responsible for a barley production increase of 0.5 MMT to 53.2 MMT and corn output being forecast 0.4 MMT higher to 66 MMT versus May projections.

Further production upgrades could also be on the cards if favourable weather conditions continue, they added.

With only two weeks to go to the end of the 2011/12 marketing year Brussels issued 117 TMT of soft wheat export licences this past week, bringing the year-to-date total to 12.3 MMT, almost a third lower than last season.

FranceAgriMer keep edging up their 2011/12 French grain stocks estimates as their exports remain more sluggish than expected.

The euro held up rather well today in the light of yields on Spanish 10-year bonds jumping to a Euro-era high of 7% and yields on Italian 3-year bonds also sharply higher than they were a month ago. The next hurdle is the Greek elections on Sunday.

Spain had it's credit rating cut to only one notch above junk status by Moody's last night, whilst Cyprus had theirs flushed even further down the lavatory.