The EU can expect a bumper corn crop this autumn, which would reduce animal feed costs and lower imports from Brazil, according to traders on Thursday (September 4, 2008).

 

EU corn harvest is expected to increase 25 percent on-year to 59.7 million tonnes, according to a forecast by French grains analysts Strategie Grains. German grain trading house Toepfer International has forecast a 57.2 million tonnes-large crop.

 

Toepfer estimated that only 4 million tonnes of Brazilian corn will be imported in the 2008/09 season, a sharp decline from the 13 million tonnes in 2007/08.

 

The large crop will turn EU's head away from Brazilian corn and instead, set its eyes on Ukrainian and other Black Sea region supplies, one trader said.

 

A German trader said the feed cost outlook has turned around in the past few weeks and that livestock producers will benefit from the large corn crop after getting their pockets burnt by high feed prices in the past year.

 

EU farmers increased corn and other grain plants last winter to benefit from surging grain prices.

 

Prices have declined sharply as the arrival of the large crop approaches. Paris corn futures fell more than 25 percent since the end of June, while German corn prices have dropped to EUR 170 per tonne for September delivery from EUR 225 per tonne in early August.

 

Germany's corn crop is expected to rise 28 percent on-year to 4.8 million tonnes, while France is projected to harvest about 14.5 million tonnes, a slight increase from last year.

 

Major exporter Hungary will harvest 8.5 million tonnes, a sharp increase from 4 million tonnes last year and this may also depress prices as the crop would be offered aggressively to feed maker in West Europe, according to Toepfer.

 

Italy has begun to harvest its corn crop, which is expected to be 10-20 percent larger than last year's 9.85 million tonnes, traders said.

 

Russia is expecting a record corn crop of 5-6 million tonnes this year, according to Dmitry Rylko, director of Russia's Institute for Agricultural Market Studies. Russia's corn acreage this year rose to 1.8 million hectares from 1.57 million hectares last year.

 

Ukraine is also expected to increase its corn crop by about 35 percent to 8.5 million tonnes this year.

 

Analysts also said an increase in harvest may lead to higher Ukrainian corn exports this season, at 2.7 million tonnes compared to 1.5 million tonnes last year.

 

If the forecasts turn out to be true, this may further dent Brazilian and US grain exports, as the EU is already expected to harvest 133.9 million tonnes of soft wheat crop this year, up 22 million tonnes on-year.