EU Wheat Ends Unchanged To Lower After USDA Numbers

EU wheat futures closed flat to slightly lower Friday in the aftermath to the USDA's October Supply & Demand and stocks reports.

Paris November milling wheat futures closed down EUR1.25 at EUR126.00/tonne, and London November feed wheat was unchanged at GBP101.00/tonne.

The USDA report was bearish for wheat and corn, pegging US 2009/10 wheat ending stocks significantly higher than expected at 864 million bushels against trade estimates of 802 million.

Australian wheat output was raised half a million to 23.5 MMT, EU-27 production was seen up over half a million to 139.08 MMT, Canadian output up 2 MMT to 24.5 MMT, Kazakhstan was upped by half a million to 15 MMT and Russian production increased by a million to 57.5 MMT.

None of those increases however were particularly shocking, as this really just brought the USDA's figures into line with other existing trade estimates. Indeed, the most surprising thing is the Russian estimate is still almost certainly too low, and well below that from SovEcon of 60-61 MMT. History would seem to indicate that SovEcon have a much better track record at what is going on in their own backyard than the USDA.

Despite those increases however, global 2009/10 ending stocks were only increased slightly to 186.73 MMT, from 186.61 MMT last month, with global consumption increasing by 2 MMT to 648.15 MMT.

On the domestic market, futures prices have now clawed their way back above the GBP100/tonne mark, with the November close today exactly GBP10/tonne, or almost 11%, above the recent September 9th low.

Back then however the pound was worth USD1.6550 and EUR1.14, so at least some of this gain can be attributed to currency movements. With sterling having subsequently fallen around 4% against the dollar and 6% against the euro since then.

In the same time frame Paris November wheat has risen by a more modest 6%.

Meanwhile, the USDA forecast the US 2009 corn crop at 13.018 billion bushels with an average yield of 164.2 bu/acre. That was higher than the average trade guess of 12.99 billion and 162.7 bu/acre.