March 17, 2008

 

Rising import prices prompt Egypt to grow more corn

 

 

Egypt will have a slight increase in corn acreage for year 2007/2008, thanks to rising prices for imported yellow corn, according to a USDA Attache report.

 

Local farmers are also switching to corn from rice due to the higher prices, resulting in estimates for corn production rising from 6.1 million tonnes in 2007/2008 to 6.2 million tonnes 2008/2009, the report said.

 

However, corn consumption for feed has continued to decline in the past two years, even as total corn consumption remained stable.

 

In 2007/08, corn feed consumption is estimated at about 8.3 million tonnes, compared to 8.38 million tonnes in the previous year, the USDA stated.

 

The majority of the local corn crop is utilized for animal feed (mostly consumed on farms) and about 1.5 million tonnes is used for food purposes (either milled or consumed fresh). Large commercial end-users and feed mills rely on imported yellow corn to meet their requirements.

 

Corn use in feed is forecast to remain depressed in 2008/09 as the poultry industry is still reeling from bird flu, which began in February 2006, the report said.

 

Continued bird flu outbreaks in 2008 could cloud prospects for the industry and temper expectations for further increases in demand for corn. In addition, rising international prices for corn, soymeal and other feed ingredients, coupled with constant output (milk and beef) prices, have forced some dairy farms and feedlots to go out of business, the report noted.

 

Growing demand for food products containing corn (snack food), corn oil and subsidised bread have helped to partially offset the decrease in demand for corn in the feed industry.

 

The report said that bird flu and the loss of some dairy and beef farms have depressed forecasted use of imported corn by the poultry and livestock sector to drop to about 8.09 million tonnes in 2008/09. However, this drop will be offset by growth in use of imported corn in the processing sector.

 

Total corn imports for 2007/08 are expected to decrease.

 

Egypt's corn imports since the beginning of 2007/08 (October 2007) until the end of December 2007 are estimated at 782,921 tonnes compared to 918,157 tonnes during the same period of the previous year.

 

US market share accounted for 75 percent compared to 96 percent in 2005/06 and will continue to dominate the market.

 

However, Argentina is rapidly gaining market share. The country's market share increased against US share in MY 2006/07, supplying 16 percent in 2006/2007 compared to just 3 percent in MY 2005/06.

 

Still, US market share is expected to rebound 2007/08.

 

At the end of December 2007, US corn imports accounted for 86 percent of the Egyptian import corn market.

 

Competition from Argentina and other suppliers of yellow corn is expected to continue to be modest in 2008/09 as the price gap between US and other suppliers is expected to be marginal.