September 14, 2007

EU to largely source its 2007/08 corn imports from Brazil

Cereal market analyst Strategie Grains on Thursday (September 13) predicted 2007/08 corn imports into the European Union at 10 million tonnes, a leap of 3.3 million tonnes on the year with Brazil supplying 7 million tonnes of the grain.

The EU's strict zero tolerance policy on non-approved genetically modified products means corn imports from the US and Argentina won't be possible, leaving Brazil the only major source. Strategie Grains didn't specify where the balance would come from.

Forecasts for a large 2008 Brazilian corn harvest and sufficient US corn exports to cover countries that normally purchase Brazilian corn, "should ensure that the EU is able to import this very large quantity of non-GMO (corn)," said Strategie Grains.

Paris corn futures set a record high of EUR279.50 (US$387.84) a tonne on September 5 due to this season's tight domestic supplies.

This summer adverse conditions were reported throughout the EU. Drought slashed output in eastern EU countries, while in the western EU yields were trimmed as a hot, dry April was followed by an overly wet summer.

Strategie Grains forecasts 2007/08 cereal output at 257 million tonnes, down 2 percent from last season's reduced crop.

"The high level of projected imports from third countries should allow EU supply and demand to balance, assuming Brazil's harvest matches current forecasts and that the spread between US and Brazilian (corn) prices remains wide," said Strategie Grains.

The report said EU corn prices could ease without jeopardizing the level of Brazil's imports, but downside potential is limited due to high wheat and barley prices.