Nogger's Blog

11/05/11 -- EU grains closed mostly lower on the back of a bearish USDA stocks and supply & demand report. May London wheat fell GBP2.75/tonne to GBP202.75/tonne with new crop Nov down GBP3.35/tonne to GBP175.65/tonne. Nov Paris wheat fell EUR1.75/tonne to EUR227.00/tonne whilst May declined EUR2.00/tonne to EUR229.75/tonne.

The USDA pegged EU-27 wheat production at 138.62 MMT for 2011/12, largely ignoring the impact of the dry spring although they did comment that it was "limiting production" here.

World wheat production will match consumption at around 670 MMT in the coming marketing year, they said. However, a return to near normal output from the FSU countries of Russia, Ukraine and Kazakhstan will see US and EU exports reduced next season, they added.

Wheat output in Russia is forecast to rebound 28% to 53 MMT, with that of Ukraine increasing by 13% to 19 MMT and Kazakhstan by 55% to 15 MMT in 2011/12. That will see foreign sales from the three aggressive FSU exporting nations rise by 150%, 143% and 50% respectively next season, they estimate.

In addition, imports from Egypt and Morocco will decline by 7% and 46% in the coming season on the back of improved wheat harvests there. Egypt has been out of the market for some time and recently stated that it had sufficient stocks to cover eight months needs.

As the FSU countries return to flex their muscles on the international market US wheat exports are seen falling 18% from 34.7 MMT this season to 28.58 MMT in 2011/12, with EU-27 exports also down 18% from 22 MMT to 18 MMT.

World barley production is seen rising 8 MMT, or 6.5%, to 134.5 MMT in 2011/12, with the EU-27 accounting for 53.9 MMT of that total, some 400,000 MT more than we consume. EU-27 exports are seen almost halving to 2.5 MMT.