EU Grains Climb On Back Of USDA Data

Posted by Nogger - a legend in his own mind at 19:12 | Categorized as

31/03/11 -- EU grains closed with May London wheat up GBP3.00/tonne to GBP202.00/tonne and with new crop Nov climbing GBP5.05 to GBP167.55/tonne. May Paris wheat rose EUR3.50/tonne to EUR240.00/tonne and Nov was up EUR6.50/tonne to EUR213.00/tonne.

A bullishly construed set of data early afternoon from the USDA was the catalyst after futures had been mostly lower in the morning.

There are some concerns over dryness in some parts of Europe, and worries that winterkill may have caused damage in parts of Germany and Poland, but today was all about the USDA numbers.

The data for old crop corn was undeniably bullish, with March 1st stocks pegged beneath even the lowest trade estimate at 6.52 billion bushels (165.6 MMT), and weekly export sales coming in at 2.23 MMT - a marketing-year high.

CBOT corn opened limit up (+30c) and stayed there. At the close of the EU markets corn was synthetically worth a further 30c higher than that.

However looking further forward, 2011 spring US corn plantings were pegged at 92.2 million acres, up 4 million on last year, above the average trade guess and close to the upper end of the range of trade estimates. Today's price action is only going to encourage further planting increases.

With a significant doubt over the continuation of the ethanol blenders tax credit in the US being extended beyond the end of 2011, corn demand in 2012 at these levels is questionable.

On the face of it the USDA's wheat data was actually bearish, with higher plantings and stocks than expected. Weekly export sales were also disappointing. Corn made sure that these factors were largely ignored, although legitimate weather concerns remain for US wheat on the Southern Plains.