Nogger's Blog

12/06/12 -- EU grains closed lower Tuesday with Jul 12 London wheat down GBP0.35/tonne to GBP172.65/tonne and Nov 12 falling GBP2.80/tonne to GBP154.00/tonne. Even inactive Aug 12 Paris wheat fell EUR2.75/tonne to EUR205.75/tonne, whilst Nov 12 was down EUR3.75/tonne at EUR206.00/tonne.

The long awaited USDA report came in bearish for corn, slightly friendly for wheat and bullish for soybeans. The question was could wheat post gains whilst corn slumped? The answer was no, at least not today anyway.

For corn there wasn't a bullish number in sight. So despite the usual trade scepticism over the accuracy of the data, Chicago corn futures - which opened a couple of hours early to accommodate the release of the report - came in lower and quickly dragged wheat with it.

For corn, we got unchanged US old and new crop ending stocks, contrary to expectations for reductions in both. We also got a larger than expected increase in Brazilian output this season, a lower than anticipated cut to Argentine production and an extra 2 MMT added to China's 2012 harvest to boot.

The net result of that was a 2012/13 world record 950 MMT corn crop, more than 4 MMT up on last month's estimate and global ending stocks for the coming season 6 MMT more than expected.

The EU-27 wheat crop was cut to a lowish-looking 131 MMT, and Russia's production reduced from 56 MMT last month to 53 MMT this time round. World wheat ending stocks for 2012/13 were trimmed 2.4 MMT to 185.8 MMT, although this was a smaller cut than expected and represents more than ample stocks to usage.

America's wheat crop was reduced slightly from last month, although at 60.8 MMT it's still an increase of nearly 12% on last year.

Soybeans continue to look the strongest leg of the three, with US old and new crop ending stocks cut more than anticipated and Chinese imports for 2011/12 raised 1 MMT to 57 MMT and those of 2012/13 pegged at a record 60 MMT.

Attention is already starting to re-focus on Europe with the Greek elections coming up this weekend and Spanish and Italian borrowing costs back on the rise today following yesterday's short-lived, and misplaced, euphoria.

At home, the HGCA say that winter cereals are close to or slightly behind average development. "Crops currently have good yield potential, but disease pressure is high," they add.

"In France, 72% of the winter wheat crop was rated good to excellent on 4 June, considerably higher than the 24% at the same stage last year," they note.

They also say that recent rains in Germany and Poland have helped to improve crop conditions there.

Elsewhere, UkrAgroConsult said that despite the lower grain output anticipated there this year they see Ukraine's 2012/13 total grain exports rising 20% to 24.3 MMT due to that fact that export restrictions heavily curtailed shipments during the first half of the current season.