EU Wheat Ends Higher On More Crop Downgrades

Posted by Nogger - a legend in his own mind at 11:41 | Categorized as

11/10/12 -- EU grains were higher following a bullish USDA report with Nov 12 London wheat up GBP2.50/tonne to GBP202.00/tonne and with Nov 12 Paris wheat EUR2.25/tonne higher at EUR263.50/tonne.

The USDA cut 5.7 MMT off world what production in 2012/13 to 653 MMT, 6% or 42.7 MMT lower than last season. Included in that was a 1 MMT cut for Russia to 38 MMT, now almost a third down on 56.2 MMT last year, and a 3 MMT reduction for Australia taking its crop to 23 MMT, 22% down on a year ago.

They also sliced 3.7 MMT off world ending stocks, reducing those to 173 MMT, a 25 MMT reduction on last season.

The USDA cut their UK wheat crop estimate to 14 MMT. Offre & Demande Agricole pegged it at 13.6 MMT, in line with Coceral's recent estimate, but above yesterday's offering from the NFU. They placed average yields a little better than the latter at 6.8 MT/ha, which ties in the the HGCA's "lower end of" 6.8-7.2 MT/ha estimate.

They also opined that the UK will import more wheat than it exports this season. Few would argue with that, it's just a case of now trying to work out how much of our 13-14 MMT of low bushel weight wheat will get blended in with higher grade foreign wheat and exported.

It is also unknown how large imports will be this year. ODA estimate the latter at 1.5 MMT (against around 0.9-1.0 MMT in a normal year), and exports at 1 MMT (versus 2.5 MMT typically in recent years).

Many think that imports could be closer to the 2.0-2.5 MT region, especially if and when Vivergo fire up around Christmas time. Only time will tell.

In other news the Ukraine government said that they were increasing the volume of wheat they would allow to be exported this season from 4 MMT to 5 MMT, of which 3 MMT has already been shipped.

MDA CropCast cut their Australian wheat production estimate by 160 TMT to 20.77 MMT, down 29% versus a record 29.2 MMT in 2011/12, citing persistent dryness, particularly in Western Australia. They also reduced their barley output forecast by 0.8 MMT to 6.8 MMT, down 19% on 8.4 MMT in 2011/12.