EU Wheat Closing Comments

EU wheat futures ended mixed Tuesday, Paris March milling wheat futures closing down EUR0.50 at EUR125.50/tonne, and London May feed wheat trading GBP0.25 lower at GBP100.00/tonne. Other odd months closed unchanged or with nominal gains.

The much-awaited USDA numbers came in bullish for corn, neutral for beans and a bit bearish for wheat.

They dropped EU 2009 wheat production slightly from 138.34 MMT to 138.22 MMT, but output in Argentina was raised by 1 MMT to 9 MMT, as "abundant, late-season rains raised harvested area and yields in key eastern growing areas." Production in the Ukraine was also increased by 400,000 MT to 20.9 MMT.

World wheat ending stocks increased by 300,000 MT, US ending stocks were also slightly increased when a small decrease had been generally anticipated.

The reason given for the increase in US wheat ending stocks was an increase in imports. "Imports are raised based on expected shipments of South American and European feed quality wheat into the southeastern US market", they said.

The euro rallied late in the day as talk began to surface of a softening of Europe's stance in relation to a bailout of Greece. Although that would cost the Euro Zone members financially, it may well not cost as much as a refusal to help in the long run.

A reversal in the fortunes of corn might also ultimately help wheat. The USDA reduced ending stocks by more than anticipated by increasing demand from the ethanol sector. "Recently lower corn prices continue to support profitability for ethanol producers," they said.