EU Grains Slump On Beneficial Black Sea Weather, Huge US Corn Crop

28/10/13 -- EU grains closed mostly lower, with a continuation of beneficial weather in the Black Sea region seen helping growers there finish up the last of the 2013 harvest, and press on with better than feared winter plantings for 2014.

The session ended with Nov 13 London wheat down GBP0.75/tonne to GBP165.00/tonne, Nov 13 Paris wheat EUR2.50/tonne lower at EUR202.50/tonne and Nov 13 Paris rapeseed EUR4.75/tonne lower at EUR365.25/tonne - the latter has now fallen EUR15/tonne in the last three sessions.

The Russian grain harvest now stands at 91.6% complete, producing a bunker weight crop of 89.7 MMT, as of Friday Oct 25. Wheat accounts for 53.4 MMT of that total off 95.5% of plan, along with 15.8 MMT of barley off 91.4% of plan and a further 5.8 MMT of corn off 45.3% of the anticipated area.

Ukraine has now harvested 87% of it's planted area, producing a grain crop of 50.1 MMT to date. The main grain being harvested at the moment is corn of course, which at 58% done has produced a crop of 16.8 MMT so far, leaving it on target to achieve record production this year.

Kazakhstan's harvest meanwhile is 97.4% complete at 20.436 MMT. Yields are averaging 1.33 MT/ha, up 40% on last year's 0.95 MT/ha.

The weather is expected to continue much warmer than normal for the time of year through until at least the end of the month (Ukraine basked in temperatures of 20C at the weekend). The current dry period is also seen lasting until Friday.

This benign weather also means that winter grain plantings in Russia and Ukraine have progressed very well in recent weeks. Russia's winter grain crop has now been planted on 13.7 million hectares, or 83.6% of the originally planned 16.4 million ha. A couple of weeks ago the Ministry were suggesting that the final planted area may fall to around 13.0 million hectares.

In Ukraine, winter grains have now been planted on 7.3 million hectares (up 500,000 ha in a week) of the original Ministry target of 8.0 million. That includes 6.0 million ha of winter wheat (90% of the original forecast) and 1.0 million ha of winter barley (86% of initial ideas).

Ukraine's Jul 1 - Oct 25 grain exports now stand at 8.57 MMT, up 9.3% versus the same period in 2012. Of that total 4.1 MMT is wheat, 1.8 MMT barley and 1.6 MMT corn. They've also exported 1.7 MMT of oilseeds, mostly OSR (1.6 MMT) in that period.

Most Europe is seen continuing warmer to much warmer than normal through to mid-November. The forecast is wetter than normal in the west/north and drier in the south/east. Winter plantings in the UK, France and Germany are well advanced and crop emergence is very good.

Egypt has finalised an aid deal with UAE worth USD4.9 billion over the weekend, which includes a USD1 billion grant already issued in July, according to various news agencies. Part of the package will be used to build grain silos. Depending on which story you read this could be as few as 15x15 TMT silos, or as many as 25x60 TMT silos. It is being mooted that some of the extra cash will be used to fund further wheat purchases on the international market, with talk of a tender being issued sometime in the next 2-4 weeks.

The Egyptian Supplies Minister says that they have enough wheat to last them until February, just before they begin one the earliest harvests in the northern hemisphere, and that the government will import 5.0-5.5 MMT of wheat in the marketing year that ends in June next year. They are said to be looking at opening the door to Bulgarian wheat.

Despite their respective harvests being underway, uncertainty still surrounds the likely size of the wheat crops in Australia and Argentina. The former is forecast in the region of 23.5-26.5 MMT and the latter around 9.0-11.0 MMT. There's talk of possible frost damage to wheat and barley in Australia.

There's lots of talk of India "sharpening the pencil" as far as their aspirations on wheat export prices are concerned, but nothing concrete yet.

Tonight will bring the USDA's latest crop progress report, with the 2013 US corn harvest expected to be halfway, of slightly better. The soybean harvest is thought likely to be 80-85% complete. Talk of large, or even huge, corn yields are rife. In afternoon trade Dec 13 Chicago corn slumped to a new lifetime contract low, and the lowest level for a front month since August 2010. Next week's USDA WASDE report is shaping up to be a very important event, with the market having been largely starved of much of its regular data for the past month.