EU Grains Closing Comments - Thursday

07/06/12 -- EU grains closed mostly higher Thursday with Jul 12 London wheat up GBP0.50/tonne to GBP172.00/tonne and Nov 12 GBP1.75/tonne firmer at GBP156.75/tonne. Inactive Aug 12 Paris wheat was unchanged once again at EUR208.00/tonne, whilst Nov 12 was EUR3.00/tonne higher at EUR209.50/tonne.

There was a thin air of optimism about that the US and EU would come up with some form of new stimulus package, boosted by the news that China had cut interest rates for the first time since the 2008/09 collapse in global markets.

The FAO raised its forecast for world grain production in 2012/13 to 2.42 billion tonnes from 2.37 billion, and increased ending stocks to 548 MMT from 524 MMT. The global wheat crop was raised 5 MMT to 680 MMT, although world wheat ending stocks were cut from 183 MMT to 181 MMT - 7 MMT lower than the USDA currently project.

The USDA will issue revised world supply & demand estimates on Tuesday next week.

Also next week we have ABARES crop report due on Wednesday. "In the coming week up to 25 mm of rain is forecast for cropping areas of Western Australia. The rain should provide much needed moisture for the germination of recently sown winter crops," they said yesterday.

The Greek elections, now little over a week away, also have the potential to be a game-changer. Greek 10-year bonds are currently trading with a yield of around 28%.

Speaking at the IGC conference in London the USDA's chief economist Joseph Glauber said that record US corn production this year should help ease market volatility and see prices fall significantly in 2012/13 as stocks rebound and demand from the ethanol sector remains flat.

The Russian Ministry forecast this season's grain crop at 92-94 MMT from 94.2 MMT last year and see 2012/13 exports at 22-23 MMT versus 27 MMT in 2011/12.