EU Wheat: We're Running Out, Of Buyers Not Stock

10/03/11 -- EU wheat took another pasting today with Mar London wheat ending down GBP4.25 to GBP184.85/tonne and new crop Nov down GBP1.45 at GBP154.50/tonne. Expiring Mar Paris wheat fell EUR4.25 to EUR234.00/tonne, with Nov down EUR2.50 to EUR206.00/tonne.

That might sound bad, but it could have been much worse. May London wheat was down GBP7.75 at one stage and May Paris wheat was EUR12 lower after the USDA upset the apple cart with a few wheat-related surprises mid-afternoon.

They raised Australian and Argentine wheat production for the current season by 1 MMT each, and also upped US and world ending stocks for 2010/11 when the trade had been expecting a modest reduction in each.

"Exporter stocks remain relatively high and are boosted almost 4 MMT this month. In fact, they are estimated to be 55 percent higher than during the price crisis of 2007/08," they said.

The magic number for world wheat ending stocks was just shy of 182 MMT, now only 15 MMT below what everybody was calling the "burdensome" levels of 2009/10, and there have only been two other years in the past twenty when stocks have been higher.

A front month on London wheat hasn't been lower than this since the first day of December, and for Paris wheat it's the 7th December. Spec longholders have suddenly got a severe dose of the jitters.

News that China has just posted its biggest trade deficit in seven years and slumping crude oil, metals and other outside markets did nothing to settle the nerves.

To add insult to injury US weekly export sales were disappointing, and then as Europe was closing, we hear that Brussels only issued soft wheat export licences for a disappointing 249,000 MT for the week ending 8th March.