EU Wheat Ends Lower On Bearish USDA Data

12/10/11 -- EU closed with Nov London wheat down GBP3.55/tonne to GBP147.45/tonne and Nov Paris wheat falling EUR6.00/tonne to EUR185.75/tonne.

Grains effectively gave up virtually all of yesterday's gains on the back of a surprisingly bearish (for wheat) USDA report.

They pegged world wheat production 3 MMT higher this month than last, including a 3 MMT hike for output in Kazakhstan (although at 19 MMT that's probably still too low) and an extra 1 MMT coming onto the market from Australia.

In addition, global consumption was pegged 2.4 MMT lower than last month pushing projected world ending stocks next summer to a ten year high of 202.4 MMT, fully 7.8 MMT higher than last month and what the trade was expecting.

World export estimates were increased for Russia and Australia by 2 MMT each and for Kazakhstan and Canada by 1 MMT each, cutting the US share of the global export market by 2 MMT to 26 MMT - 10 MMT or 28% below 2010/11.

World corn production this season was increased by more than 5 MMT, with 3 MMT of that coming from Ukraine despite a lower estimate for US output. World ending stocks were seen at 123 MMT, up almost 6 MMT on last month and 3 MMT more than anticipated, with Chinese production getting a surprise 4 MMT boost to 182 MMT.

On a domestic front news that UK unemployment hit a 17 year high and that there are more 16-24 year olds out of work than ever before hardly inspires confidence in an economic recovery any time soon.