January 21, 2011

EU corn prices to increase if Brazil GM crops not accepted

EU corn markets, in the next few months, could face extreme price increases as the bloc's legislation on GM crops may block Brazilian imports, according to Strategie Grains.

Europe is heavily reliant on corn imports this season after production fell to 55.1 million tonnes, down 2.3 million tonnes compared with 2009, leaving the market in a predicted 500,000 tonne deficit by September 30.

The French grain analyst has forecast the bloc will need to import seven million tonnes of corn this season, with around three million tonnes expected to come from Brazil due to its competitive pricing.

However, the grain analyst said Brazilian shipments may contain traces of a new GM crop not authorized in the EU from April, restricting the bloc's supplies.

"If approval for this GMO is not granted before March, it may become necessary to reduce our forecast for imports from Brazil by around 1.5 million tonnes, which would be exceptionally bullish for EU corn prices," the analyst said.

World corn prices are already at highs not seen since 2008 after lower-than-expected yields in the US, concerns about Argentina's crop, and high imports from China sparked fears of a tightening supply-demand balance.

Even so, higher corn plantings boosted the analyst 2011-12 estimate by 500,000 tonnes to 58.6 million tonnes and estimated barley output to 55.8 million tonnes as the crops benefited from lower soft wheat acreage.