August 17, 2007

EU 2007/08 corn import rise bullish for world market

Higher 2007/08 European Union corn import demand, amid a 12 percent drop in projected EU output, will be bullish for world prices, Strategie Grains said Thursday (August 16).

Most of the increased demand is expected to be supplied through higher Brazilian corn imports. Brazil is the origin of focus due to a lack of corn availability in Serbia and Croatia and a potential presence of a genetically modified, or GMO, variety not authorized for EU commercial use in Argentinean corn, said Strategie Grains. US corn is also not a source due to the GMO issue.

Brazilian corn is currently priced at EUR40 a tonne discount delivered to Europe compared with domestic corn and a EUR30/tonne discount to domestic wheat, the report said.

Strategie Grains now forecasts the EU 2007-08 corn crop at 46.8 million tonnes, down 7.9 million from the July projection and down 12 percent on the year-earlier figure.

A heatwave and drought in July had a "very severe" impact and cut yields sharply in key producers such as Hungary, Romania and Bulgaria, the report said.

Due to the drop in the EU wheat crop, overall EU 2007-08 cereal production is forecast by Strategie Grains at 257 million tonnes, down 2 percent on the year.