EU Wheat Lower On The Day, Higher On The Week
For the week Nov 12 London wheat still gained GBP4.00/tonne and Nov 12 Paris wheat added EUR3.00/tonne. For Nov 12 London wheat this was the highest close in the contract's history on the weekly chart.
Wheat traded either side in early trade on the day but edged down in the afternoon following the release of the USDA's eagerly awaited August supply & demand report after which Chicago wheat moved lower.
Not that the report was particularly bearish, it seemed to be more a case of buy the rumour and sell the fact. US corn and soybean yields & production were both cut more than anticipated. US wheat production was raised 1.2 MMT to 61.73 MMT however, an increase of 13.5% on last year.
World wheat production though was trimmed 2.5 MMT, with Russia taking the largest (but not unexpected) hit, down 6 MMT to 43 MMT - towards the lower end of trade estimates. Output from Russia, Ukraine and Kazakhstan is now seen at 69 MMT versus 101 MMT last year.
Russia's wheat exports in 2012/13 are forecast to shrink 63% to just 8 MMT, with Kazakhstan's down by a third to 7 MMT, although Ukraine's are seen increasing 13% to 6 MMT thanks to better production than feared and healthy carry-in stocks.
World wheat ending stocks were forecast 5.3 MMT lower to just over 177 MMT, the lowest since 2008/09, although that still represents a comfortable stock to use ratio of 26 percent.
In amongst all the data was a small downwards revision for European wheat production to 132.9 MMT, a 3% reduction on last year. The French crop is seen up 8% to 39 MMT, with Germany's broadly unchanged at 22.5 MMT and the UK's up a tad on last year at 15.5 MMT (although that's 100,000 MT down on last month).
Trade gossip suggests that the UK number may be optimistic. Very early wheat harvest results are disappointing so far with yields of 7.4 MT/ha being reported compared to the five year average of 7.8 MT/ha. With a planted area of 2 million hectares that would suggest a crop of 14.8 MMT, although other trade estimates are lower than that.
The USDA also cut the world corn crop to 849 MMT, 6% down on last month, thanks largely to US output being slashed 17% to 273.8 MMT - a six year low. Europe's corn crop was also cut 4 MMT to 61.5 MMT, whilst Ukraine's was trimmed 3 MMT to 21 MMT.
The USDA raised European rapeseed production by half a million tonnes to 18.5 MMT, with France producing 5.36 MMT (unchanged on last year), Germany 4.9 MMT (up 27%) and the UK 2.64 MMT (down 4%).
The USDA are estimating the average UK wheat yield at 7.7 MT/ha (which may prove to be too high this year), with barley yields coming in at 5.6 MT/ha (maybe too low) and rapeseed yields averaging 3.6 MT/ha (the HGCA say 3.4-3.6 MT/ha).