EU Wheat Closing Comments

Posted by Nogger - a legend in his own mind at 19:40 | Categorized as

24/05/12 -- EU grains finished mostly higher with Jul 12 London wheat ending up GBP0.25/tonne to GBP174.00/tonne, and new crop Nov 12 up GBP1.85/tonne to close at GBP158.00/tonne. Aug 12 Paris wheat was unchanged at EUR212.75/tonne, whilst Nov 12 was EUR0.75/tonne firmer at EUR212.75/tonne.

Reports of heavy overnight rain in southern and eastern Ukraine should help wheat crops there. The south of Russia is apparently seeing more scattered showers, and although crop production estimates here are being trimmed most local analysts agree that this is not a repeat of 2010 - at least not yet.

The Russian Grain Union says that the 2012/13 grain harvest will “at least" match last year’s 94 MMT, with wheat production at "at least" 56 MMT. SovEcon have trimmed their estimate slightly to 87m-91 MMT from 87m-93 MMT.

The International Grains Council have cut their 2012/13 world wheat production estimate by 5 MMT from last month to 671 MMT, 3.5% down on last year. World ending stocks are seen falling 15 MMT, or 7.3% from last month to 191 MMT - although this is still more than three month's usage.

World corn production on the other hand is seen rising to an all time record 913 MT, 13 MMT up on last month's estimate and 47 MMT more than global output last year.

"Early seeding has reinforced expectations for a huge US harvest. Assuming a significant rise in harvested area, and with yields forecast to match the 10-year trend, US production is projected at 355 MMT, up by 13% year-on-year," they said.

Meanwhile corn production in Ukraine this year is pegged at around 23.0-25.5 MMT by an assortment of local groups, around half of the country's total cereal harvest - a much larger share than we have seen from them before and one that could propel them to be the world's second largest exporter after the US in the coming season.

It would seem that wheat's misfortune is going to be corn's gain in 2012.

In other news, the UK is technically in a double dip recession, according to the latest figures from the Office for National Statistics.