EU Wheat Mostly Lower As Trade Digests USDA Numbers

09/02/12 -- EU grains finished mixed but mostly lower with Mar 12 London wheat ending up GBP0.25/tonne to GBP167.25/tonne and Mar 12 Paris wheat down EUR3.00/tonne to EUR213.00/tonne.

The long awaited USDA production and stocks numbers were called neutral by many, despite the fact that they gave us the largest world wheat ending stocks of all time.

Coming in at 213.1 MMT that was 3 MMT up on last month and comfortably eclipses the previous record of 210.4 MMT set in the 1999/2000 season. As an interesting aside on this day in that particular production year front month London wheat was trading at GBP71/tonne. How times have changed, we've got more wheat in the world than we did then yet prices are almost 2 1/2 times higher!

The other pertinent bits of the USDA report include an increase in Russia's wheat exports this season by 1 MMT matched by a similar reduction in those from Ukraine. Overall world wheat production was increased 1.3 MMT and world consumption reduced by 1 MMT.

World corn production fell by 4 MMT courtesy of Argentina, a little surprisingly there was no reduction for Brazil.

Elsewhere there were reports of "under the counter" wheat business being done with Iran, despite international sanctions. They were said to have bought 200,000 MT each of Brazilian & German wheat in the past few days, with rumours suggest they are paying with gold bullion, oil & yen.

Iraq were also said today to have bought 100,000 MT of Australian wheat.

The Russian Ag Minister said that plantings for the 2012 grain harvest will increase 2.4%, and that winterkill of 6% is below average, adding that 2012 output "will exceed" 90 MMT.

The Bank of England decided to increase QE by a further GBP50 billion, that initially boosted the pound although by the close of play sterling was back down to the 1.19 mark against the euro and little more than 1.58 versus the US dollar.