November 13, 2007

 

EU feed makers using cheaper corn as substitute for expensive wheat

 

 

More EU feed makers are switching to cheaper corn due to soaring wheat prices, according to a report by the Guardian newspaper in the UK.

 

The switch has been so large that EU wheat normally used as a feed ingredient could now be freed to allow higher than expected wheat exports in coming months, the paper said.

 

In fact, EU feedmakers have been making cheaper corn imports from Brazil rather than buying more expensive EU wheat, the paper said. 

 

EU grain markets especially that of wheat soared in past months because of tight global supplies as several EU countries and Australia, a major wheat producer, grappled with drought.

 

In comparison, a good corn crop in western Europe has presented cheaper alternative supplies to EU feed producers, the paper reported.

 

Moreover, reduced corn import tariffs by the EU on account of the high international corn prices also spurred more corn imports from Brazil.

 

EU figures show the bloc has licensed imports of 5.7 million tonnes of corn so far this crop year, more than triple that a year ago.

 

Corn used in feed in France is expected to be up 42 percent from the previous year to 3.7 million tonnes, according to the French arable crop office ONIGC.

 

In contrast, the amount of feed barley and wheat used to produce animal feed is expected to fall by 36 and 18 percent respectively compared with last season.

 

The same pattern is seen in Britain, which is importing more corn from Brazil rather than using corn from continental Europe.

 

UK corn imports were up 27 percent on-year in July and August, with imports from Brazil showing the largest increase.

 

German traders also estimated that 20 to 40 percent more corn is used in feed this season, the report said.

 

EU traders estimate that corn imports have risen by about four million tonnes so far this season, meaning that all the extra corn would probably displace wheat, making more available for export.