August 6, 2007

 

High European wheat prices hike demand for US, Brazil feed in EU
 

 

High prices of wheat in EU spiked demand for Brazilian and US feeds in some European countries, analysts said.

 

However, US corn will not be the option for EU feeders as it may contain genetically modified organisms (GMO) which is currently banned by many EU members including Austria, Hungary, Poland and Greece.

 

The wet season has reduced wheat yields and quality in Western Europe while drought has significantly cut production in several eastern countries such as Russia and Ukraine. Some wheat prices have soared to all-time highs.

EU nations were expected to use roughly 55 million tonnes of feed wheat this year, down from earlier estimates for about 57 million tonnes, according to some analysts' forecasts.

 

Countries without GMO import restrictions have also been selling the non-GMO grain they have on hand to EU importers to seize rising prices, according to Gavin Maguire grain analyst at Iowa Grain. He cited Iran as a recent seller of Brazilian corn.

 

This year, Brazil is likely to double corn exports from a year ago, with Europe cornering the large chunk.

Brazilian corn exports could reach about 8 million tonnes this year, up from the 4 million tonnes it exported in the 2005/06 marketing year, according to government forecasts.

 

On the other hand, US sorghum exports to EU countries this marketing year have increased ten-fold from year-ago levels and sorghum prices at US Gulf export elevators have jumped more than 30 percent from last year, according to US Agriculture Department data.

 

Total sorghum export sales to the 27 European Union countries as of July 26 totaled about 735,000 tonnes in the 2006/07 marketing year, up from 65,600 tonnes at the same point in the last marketing year, according to USDA data.

 

Government predictions has upped 2007 sorghum production in 2007 by 35 percent from last year and analysts expect exports to Europe to remain brisk as long as prices are attractive.

 

Meanwhile, US-sourced dried distillers' grains, or DDGS, are also an option for European feed importers, although any export shipments would probably be small because DDGS can be used only in limited amounts in livestock rations.

 

According to Maguire, imports of DDGS, which are a byproduct of ethanol production, may also be blocked by some countries because it may have been produced from GMO corn.