November 12, 2007

 

EU Wheat: Trades down on USDA increase in world wheat stocks

 

 

Liffe's European wheat futures traded down Friday (November 9) following the US Department of Agriculture's upwards revision of world wheat stocks.

 

The USDA increased its estimated end stocks for world wheat to 109.8 million tonnes, from 107 million tonnes, which was bearish news for the market.

 

Currency woes continued to put downward pressure on the market.

 

"The high value of the euro continues weighing on the market," with an increasingly weakened dollar, said a Paris-based broker.

 

Paris January milling wheat fell EUR3.75, or 1.7 percent, to close at EUR221.50 a tonne with 1,282 lots traded. London January feed wheat closed down GBP3.25, or 2.1 percent, at GBP152.00/tonne with 15 lots traded.

 

"The USDA report dominated today's movement...which was a tad negative, adding to the current slip away in values," said a London-based broker.

 

Production forecasts for Argentina, Ethiopia and China were also revised upward by the USDA report, increasing total world wheat production to 603.3 million tonnes up from the October prediction of 600.47 million tonnes.

 

Lead by the US, the European markets eased back on this news with Paris's January contract finding support at a two-week low of EUR220.00/ton.

 

However, with global stocks remaining tight, brokers said it was unlikely the price would crash. Even with increased wheat planting expected globally, market consensus was that there's a long way to go before there can be confidence of bumper crops to come.

 

French standard cash wheat delivered to the main port of Rouen was unchanged at EUR225/tonne for November-to-December delivery.

 

January Paris corn futures fell EUR1.00, to EUR208.00/tonne with 512 lots moved. February Paris rapeseed ended EUR0.25 higher at EUR381.75/ton with 308 lots moved.