EU Wheat Crashes Lower

30/09/11 -- EU grains crashed sharply lower following a bearish surprise from the USDA for US corn stocks. Nov London wheat slumped GBP5.75/tonne to GBP150.65/tonne and Nov Paris wheat crashed EUR7.25/tonne lower to EUR183.50/tonne.

The USDA pegged Sept 1st US corn stocks considerably higher than the market was anticipating, higher in fact than the top end of trade estimates at 1.128 billion bushels or 28.65 MMT. For wheat the numbers were mixed with slightly lower production than expected, but marginally higher Sept 1st stocks.

On the week as a whole Nov London wheat was down GBP5.85/tonne and Paris wheat down EUR8.00/tonne. On the month of September Nov London wheat is GBP24.10/tonne lower and Nov Paris wheat EUR27.75/tonne weaker.

This was the lowest close for a front month on London wheat in just under a year, and for Paris wheat the lowest since late July 2010.

Chicago corn was flirting with the recently increased daily 40 cent limit down when European markets closed, with Dec trading below USD6.00/bushel for the first time for a front month since January.

At home the NFU pegged the UK wheat crop at 14.7 MMT with yields averaging 7.4 MT/ha. That's lower than the HGCA's yield estimate of 7.5-7.7 MT/ha released on Thursday. The latter implies a crop of around 15.2 MMT if we use the median yield of 7.6 MT/ha.

Here's an obscure but interesting statistic for you. The NFU have been half a million tonnes below what has been generally accepted to be the correct final UK wheat production number in both September 2009 and September 2010, according to my records. Seems like they may be going for a hat-trick.

On a brighter note for all you impoverished farmers out there, the pound managed to rally above 1.16 against the euro for the first time since March in late trade on the day that the exchange rate is fixed for the single farm payment scheme. You jammy buggers!