EU Wheat Closing Comments - Wednesday

13/06/12 -- EU grains closed mixed with Jul 12 London wheat up GBP1.25/tonne to GBP173.90/tonne and Nov 12 GBP1.50/tonne firmer at GBP155.50/tonne. Inactive Aug 12 Paris wheat was unchanged at EUR205.25/tonne, whilst Nov 12 was also unchanged at EUR206.00/tonne.

ABARES forecast the Australian wheat crop at 24.1 MMT this year, 7.3% down on its March estimate and 18% below last year's record output.

Dryness in Western Australia and a switch out of wheat to potentially more profitable rapeseed production was behind the reduction. 2012/13 Australian wheat exports were estimated at 20.5 MMT vs. 2011/12 exports of 22.3 MMT.

FranceAgriMer said that French 2011/12 non-EU soft wheat exports would total 8.5 MMT, down 0.2 MMT from their previous estimate of 8.7 M and 34% below the 12.9 MMT exported in 2010/11.

The also pegged 2011/12 soft wheat exports to fellow EU members at 7.12 MMT, up slightly on their previous estimate of 7.1 MMT.

French 2011/12 soft wheat ending stocks are estimated at 2.51 MMT from their previous estimate of 2.36 MMT. These carryout forecasts have been creeping up steadily in recent months as exports to non-EU destinations have fallen away as other origin wheat has made inroads into traditional French homes in North Africa.

The German Farm Cooperatives (DRV) downgraded Germany’s 2012 wheat crop to 21.38 MMT versus their previous estimate of 22.0 MMT, and 0.5 MMT below yesterday's USDA forecast, citing significantly higher levels of winterkill than had been expected.

German barley production however will rise 3.2% to 9.0 MMT and rapeseed output will jump 18% to 4.52 MMT, they said.

Ukraine's Ag Ministry said that the country will export 26 MMT of grains in 2012/13, an increase of 13% on this season, despite a fall in production of almost 17%. High carryover stocks from the current season and no export restrictions are the reason for the disparity, they say.

Anecdotal reports reveal that the winter barley harvest began yesterday in the Crimea area of Ukraine.

The European debt crisis continues to keep market participants nervous with the Greek elections looming at the weekend. Yields on Italian one year bonds jumped from 2.34% a month ago to 3.972% today. That's bad news as tomorrow they will attempt to auction off longer-term debt tomorrow.

Meanwhile Spanish 10-year yields are now at 6.72% and the German press is apparently reporting that Greece could be in need of a third bailout soon.