EU Grains Lower, USDA Report Largely In Line With Expectations

10/03/14 -- EU grains closed lower, in consolidation from the recent rally ahead of this afternoon's USDA March WASDE report, and disappointment after Chinese manufacturing data came in much weaker than expected. Other news was thin on the ground.

The day ended with Mar 14 London wheat GBP1.20/tonne lower at GBP163.45/tonne, and with new crop Nov 14 London wheat closing GBP1.05/tonne easier at GBP154.70/tonne. Mar 14 Paris wheat went of the board EUR6.75/tonne lower at EUR208.50/tonne, Jun 14 Paris corn was down EUR1.50/tonne to EUR182.50/tonne, whilst May 14 Paris rapeseed fell EUR2.75/tonne to close at EUR409.00/tonne, whilst other months posted double digit losses.

In the end, the USDA report didn't really tell us anything that we didn't know already. "Global wheat trade is forecast at a record and the EU is in the best position to benefit from the expansion with its freight and logistical advantages to markets in the Middle East and North Africa," they said.

"In addition, supplies are abundant as a result of resurgent production and less use in feed rations. EU corn supplies are plentiful on account of a large crop and another year of sizeable imports. Low corn prices are driving a shift from wheat to corn in feed rations, freeing up more wheat for export," they added.

They increased the size of EU-28 wheat exports by 1.5 MMT to a record 29 MMT, noting that "export licenses of nearly 2.7 MMT in the last 4 weeks reflect continued strong sales."

Russia's export potential was increased by 1 MMT to 17.5 MMT "as a result of increased competitiveness evidenced by recent sales to Egypt and Iran."

Australia's 2013/14 wheat crop was increased by 0.5 MMT to 27 MMT, and India's upped by 1 MMT to 93.5 MMT. World wheat ending stocks were virtually unchanged at 183.8 MMT, which was in line with trade expectations.

The EU-28's corn imports in 2013/14 were raised by 0.5 MMT to 11.0 MMT, whilst corn exports were cut by a similar amount to 2 MMT.

Russia continues to makes strategic moves to tighten their grip on the Crimea, which keeps the market nervous.