EU grain market report - 27th July 2012
Grains were posting decent gains for most of the day, but worked lower late on as US markets extended this week's declines on news of overnight rain and a cooler, wetter outlook to come.
Early strength was linked to news that ECB President Mario Draghi made a high profile statement saying that he would do whatever it takes to protect the Eurozone from collapse.
A lesser publicised comment came from Citi Group's chief economist who said that there is a 90% probability that Greece will leave the Eurozone.
The IGC cut their forecast for world corn production in 2012/13 by 53 MMT to 864 MMT, largely thanks to a 50 MMT hit to the US crop to 300 MMT. Those estimates are 41 MMT and 30 MMT below the latest USDA estimates, which is a little unusual for the IGC.
They did also however cut world consumption by 32 MMT, taking ending stocks down 22 MMT to 115 MMT - the lowest since 2006/07.
There were only minor tweaks to the balance sheet for wheat, with global production unchanged from last month at 665 MMT. Despite the slash to global corn supplies world wheat consumption was actually reduced by 3 MMT and ending stocks increased 1 MMT. All three are within spitting distance of the existing USDA projections.
The Russian Ministry said that grain yields this year are 34% down on last season, a big drop but one that is only in line with information already in the market.
Of more interest may be the news from Russia’s Grain Union that their Prime Minister will hold a meeting on August 8th to discuss the grain markets. They went on though to say that there should be no need to limit exports in 2012/13 and forecast them at 15-20 MMT, versus 27 MMT in 2011/12.
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