EU Wheat Closing Comments
11/01/13 -- EU grains closed mostly lower with Jan 13 London wheat unchanged at GBP207.00/tonne, May 13 was also flat at GBP207.00/tonne and new crop Nov 13 was GBP0.75/tonne easier to GBP183.00/tonne. New front month Mar 13 Paris milling wheat fell EUR1.25/tonne to close at EUR244.75/tonne.
It was a strange day, the first time that we've had a potentially market-moving USDA report released near the end of trading in Europe. Not just that, but near the end of European trade ON A FRIDAY. As a side issue, three of the next four USDA WASDE reports are also scheduled for release on a Friday night, so along with 21 hours/day trading this looks like something we are going to have to get used to.
It was relatively thin, low volume session for London wheat, but at least it did manage to close well off the intra-day lows. For May 13 these were down GBP2.25/tonne at one stage, and for new crop Nov 13 we were trading GBP3.75 down earlier in the day.
For wheat and corn the USDA numbers came in bullish, although not without the odd bearish element. It remains to be seen if they can hang onto what looks like being some initial upside momentum for much of next week.
For wheat, the main bullish impetus came from a US all winter wheat area of 41.8 million acres. That was 0.8 million below the average trade estimate, and only 0.1 million more than the lowest trade forecast.
US Dec 1st wheat stocks were also projected lower than the 1.674 million bushels anticipated at 1.66 million. US 2012/13 carryout was also below the 743 million expected, and the 754 million forecast last month, at 716 million bushels.
On a global level, world wheat production for 2012/13 came in 0.8 MMT less than last month at 654.3 MMT, although ending stocks were only reduced marginally from 176.95 MMT to 176.64 MMT.
On a world trade level, Argentine wheat exports were inexplicably left at 7.5 MMT (output was trimmed only modestly from 11.5 MMT to 11.0 MMT), with Australian exports cut 0.5 MMT to 19.0 MMT. There were rises in exports for India (up 0.5 MMT to 8.0 MMT), Russia (up 0.5 MMT to 10.5 MMT) and Ukraine (up 0.2 MMT to 6.2 MMT).
Corn got a boost from a US 2012/13 ending stocks estimate 65 million bushels below expectations at 602 million bushels (15.3 MMT - down 1.1 MMT from last month). Despite US corn exports seen falling 4 MMT from the 31 MMT predicted last month, the USDA essentially are forecasting increased domestic usage of both corn and wheat.
