EU Wheat Slips On Outside Influences

23/05/12 -- EU grains finished mostly lower on the day with May 12 London wheat thankfully going off the board unchanged and untraded at GBP175.75/tonne, and with new crop Nov 12 down GBP2.65/tonne higher to GBP156.15/tone. Nov 12 Paris wheat was down EUR2.50/tonne to EUR212.00/tonne.

Outside influences weighed on the market with European leaders meeting to discuss the Greek situation and how to stimulate growth. NYMEX crude fell below USD90/barrel to it's lowest levels in almost seven months, whilst the FTSE100, Dax & Cac 40 all posted declines of around 2.5% as confidence in a credible solution to the crisis waned. The euro fell to its lowest level against the US dollar since August 2010 today.

US wheat and soybeans also fell sharply, although corn did a reasonable job of bucking the trend.

Rain of varying degrees of intensity and confidence are in the forecasts for some of the driest parts of the wheat world in the week ahead.

Following last week's steep price rally for US wheat there is talk of Asian buyers, who had been booking cheap Australian and other origin wheat switching back into corn now that it is the cheaper grain for the first time in some while. East Asian countries import more than 30 MMT of wheat and 37 MMT of corn every year, around 50% of which is used for animal feed.

A report out from the HGCA today says that no significant wheat usage is forecast for either Ensus or Vivergo this season "as one is currently out of production and the new plant at Hull is not expected to be online until the summer."

UK wheat closing stocks for the current 2011/12 season are forecast to at 1.53 MMT, similar to 2010/11 whilst remaining at historically low levels. Wheat exports are estimated at 2.45 MMT, 8% lower than 2010/11, they add.

Domestic cereal crops out in the field are generally looking in very good shape, far better than this time last year, auguring well for decent yields come harvest time.

Paris Nov 12 wheat hit 11-month highs on Monday, prompting some new crop selling amongst French farmers. Reports suggest that good volumes of old crop wheat are coming out of the woodwork in Poland. Heavy rains there last week have been replaced by warm temperatures and plenty of sunshine this week - excellent growing conditions.