EU Wheat Slumps To New Lows, Pressured By USDA Numbers

12/06/13 - EU grains closed with steep looses in what has been a bit of a bloodbath past seven days. Jul 13 London wheat closed GBP3.75/tonne lower at GBP166.50/tonne and with Nov GBP3.25/tonne lower at GBP169.00/tonne, that was the best new crop performance - other months were down GBP5.00/tonne. Nov 13 Paris wheat slid comfortably below the EUR200.00/tonne mark, down EUR4.25/tonne at EUR197.50/tonne.

This was the lowest close for a front month on London wheat in 15-months and a first sub EUR200/tonne close for a front month in Paris since a brief 3-day flirtation in May 2012.

It's all gone horribly wrong for wheat, and if you need or want a knight in shining armour to come to your rescue and save the day, then the USDA wouldn't normally be top of your list. That's a bit like asking Graham Norton and Frank Spencer to back you up when the Klitschko brothers have just found you in bed with their Mum. And so it proved once again today, but more of them in a minute.

The trade is getting nervous that the impending Black Sea harvest means that Europe, America and just about everywhere else can shut the export order book until Christmas at least.

Tunisia bought 75 TMT of soft milling wheat of optional origin, thought likely to be from the Black Sea for July/August shipment. Bangladesh bought 50 TMT of Indian wheat.

The NFU said that the UK wheat harvested area could fall 29% this year. Various analysts estimate the UK wheat crop at around 11.0-12.0 MMT versus 13.3 MMT in 2012 and the 5-year average of 14.9 MMT.

Things are a bit better on the continent though. The German Farmers' Co-op pegged the 2013 wheat crop at 24.01 MMT versus a previous estimate of 23.76 MMT and the 2012 crop of 22.38 MMT. Toepfer go 23.35 MMT.

ODA yesterday estimated the French wheat crop at 36.0 MMT versus 35.6 MMT a year ago. They have the Polish crop at 8.7 MMT versus 8.6 MMT a year ago.

Whist these are all modest improvements on last season, apart from here in the UK, they are hardly dramatic increases and all mostly lower than the USDA's May forecasts of 38.2 MMT in France, 23.8 MMT in Germany and 9.4 MMT in Poland.

Australia's ABARES did however up their forecast for wheat production there to 25.4 MMT versus a previous estimate of 24.9 MMT and the 2012/13 crop of 22.1 MMT.

The USDA threw a late spanner in the works by insisting that the US corn planted area would be the same as the 97.3 million acres that they forecast last month, contrary to expectation of a cut of around 2-3 million. Yield expectations were trimmed slightly, but final production was still estimated at over 14 billion bushels, far more than trade expectations. Corn slumped and wheat went with it in late trade, dragging European grains lower with it.