EU Wheat Closing Comments - Tuesday

06/03/12 -- EU grains finished mixed but mostly lower. Mar 12 London wheat was up GBP0.50/tonne to GBP167.00/tonne, but other old crop months were down GBP1.30/tonne. Mar 12 Paris wheat fell EUR3.75/tonne to EUR216.75/tonne, with May down EUR2.25/tonne to EUR209.00/tonne.

Soon to expire Mar 12 Paris wheat continues to behave erratically, posting daily movements that are out of proportion with the other months, it looks like Mar 12 London wheat may be joining the club.

There was a general risk off feel about the market with crude oil down quite sharply, and stocks down significantly too. Concerns over economic growth in China and Europe were behind much of that.

Australia's ABARES released a slew of data for the year ahead in which they said 2012/13 global wheat production would fall by 2% to around 682 MMT, largely by virtue of reductions in output from Kazakhstan, Ukraine, Australia and India.

Three of those four, excluding Ukraine, are seen having yields return to "normal" levels after record production in 2011/12. Despite that they see 2012/13 world wheat ending stocks rising to a record 210 MMT.

Most of the remaining major producing nations will see increases in output in the season ahead, led by US production up 6% to 58 MMT and that in Russia up 5% to 59 MMT. The EU-27, Canada and China will all see production increases of 2% to 140 MMT, 26 MMT and 120 MMT respectively, they said.

The world corn crop will be a record 887 MMT in 2012/13, aided by a jump of 6% in US production, boosting ending stocks.

World barley production is seen 6% higher to 147 MMT, with the EU-27 crop up 8% to 56 MMT. They also forecast a record world oilseed crop of 467 MMT in the coming year.

"The world wheat indicator price (based on US hard red winter, fob Gulf) is forecast to fall by 7% in 2012/13 to average around USD275/tonne, reflecting record world opening stocks and expected high global production for a second year," they said. Coarse grains and oilseed prices are also seen falling by a similar amount, they added.