EU Wheat Posts Contract Highs

02/07/12 -- EU grains finished higher with Jul 12 London wheat up GBP2.00/tonne lower to GBP190.00/tonne, and new crop Nov 12 GBP3.50/tonne higher to close at GBP174.50/tonne. Aug 12 Paris wheat rose EUR5.25/tonne to EUR234.25/tonne, whilst Nov 12 was also EUR5.25/tonne firmer at EUR232.00/tonne.

Both London and Paris new crop Nov 12 wheat took out the previous contract highs, encouraged by US corn surging to 9 1/2 month highs on continued Midwest drought, dragging US wheat with it.

Despite rising wheat prices Jordan issued a tender overnight to buy 100,000 MT of wheat following business done with Tunisia and the Middle East last week.

The IGC cut their June 2012/13 world wheat production forecast by 6 MMT from last month to 665 MMT. That represents a 30 MMT, or 4.3% drop, on last year's record output.

Russian wheat production was cut 6 MMT to 49 MMT, with Ukraine's down 1 MMT to 13 MMT. Even so, this only brings the Russian number into line with other estimates from the likes of local analysts IKAR and SovEcon. The Ukraine forecast is the same as the USDA said last month.

The IGC raised their world corn production estimate 4 MMT to a record 917 MMT, despite US weather woes. The US crop was pegged at 350 MMT, which despite all the media doom and gloom still represents an increase of 36 MMT on last season, or over 11%.

Closer to home, Coceral put some flesh on the bones of their European production estimates leaked Friday. EU-27 all wheat production is seen almost 1.5 MMT lower than their March estimate at 133.14 MMT, 3% down on last year.

Whilst output in the UK (15.73 MMT), France (37.25 MMT) and Germany (22.72 MMT) were all increased from their earlier forecasts that was counteracted by reductions in particular for Spain, Poland, Hungary and Romania.

EU-27 barley production was also cut by 1.5 MMT from March to 52.57 MMT (1.7% higher than last year), whilst corn output was raised 3.6 MMT to 65.73 MMT (1.5% up on last year). The UK barley crop was pegged at 5.62 MMT.

The EU-27 rapeseed crop was cut 850 TMT to 18.28 MMT (4% down on 2011), with the UK crop estimated at 2.67 MMT, France's at 5.22 MMT and Germany's at 4.87 MMT.

Even closer to home than that, the MetOffice said today that June was the wettest since records began in 1910. It was also the second dullest June on record with just 119.2 hours of sunshine, along with being the coolest June since 1991.