EU Wheat Close

09/06/11 -- EU grains closed higher with July London wheat up GBP3.00 to GBP196.00/tonne and with new crop Nov closing GBP0.40 firmer at GBP189.40/tonne. Nov Paris wheat rose EUR1.50/tonne to EUR235.50/tonne whilst May12 was up EUR1.00/tonne to EUR238.50/tonne.

Wheat rose on the back of a bullishly construed set of USDA numbers, particularly for corn, although the final closes were well off intra day highs. Earlier in the session Nov London wheat had been GBP6.00/tonne firmer and Nov Paris wheat rose as high as EUR9.75/tonne up before initial euphoria wore off.

As far as wheat was concerned the USDA dropped their estimate of EU-27 production to 131.50 MMT from 138.62 MMT. Of that the French will account for 33.35 MMT, a fall of 12.7% on last year, with the German crop seen down 7.7% to 22.20 MMT. The UK crop is seen up marginally on last year's 14.88 MMT at 15.0 MMT, although that is a million below what was estimated last month.

All this really does is bring the USDA into line with various other estimates kicking around at the moment. A Bloomberg survey two weeks ago pegged the EU-27 wheat crop at 131 MMT, so all we have really seen today is the USDA catching up with the rest of the crowd.

EU-27 exports were cut 3 MMT from last month's forecast to 15 MMT, a fall of almost a third on the 22 MMT we are expected to ship in the current marketing year.

EU-27 barley production was cut from 53.9 MMT last month to 51.75 MMT. With Germany down from 9.62 MMT to 9.0 MMT, France from 9.6 MMT to 8.6 MMT and UK from 5.35 MMT to 5.0 MMT.

Wheat production and exports for 2011/12 were left unchanged across the entire FSU-12. Despite lower EU production, world wheat stocks for old crop were actually raised almost 5 MMT to 187.1 MMT and for new crop they were pegged 3 MMT higher than last month at 184.3 MMT.

The big bullish story was world corn ending stocks for both the current marketing year and 2011/12 coming in well below trade estimates, including new crop US corn ending stocks declining by 205 million bushels from last month (5.2 MMT). July CBOT corn raced to a new all-time record high of USD7.91 1/2c (up 27 1/2c on the day) shortly after America opened this afternoon but had given up some of those gains by the time London was closing to stand around 20c higher on the day.