August 15, 2008

A large feed wheat crop in the EU this summer is likely to reduce shipments of Brazilian corn and US sorghum, according to analysts on Thursday (August 14, 2008).

Corn exporters such as Brazil will lose out to the large feed wheat crop in the EU and Ukraine this year, which would significantly reduce import requirements and a huge market share may shift to Ukrainian feed wheat, said Oliver Balkhausen, grains analyst at German commodity analyst F.O. Licht.

Balkhausen added that a large volume of the huge wheat harvest is likely going to be sold as feed in the EU.

Strategie Grains estimated that the EU's soft wheat crop this year will reach 133.9 million tonnes, up 22 million tonnes on-year.

"The proportion of feed wheat is set to be higher than average in the east EU countries," Strategie Grains said.

UkrAgroConsult said the share of milling wheat in Ukraine's 2008 wheat crop may fall to 30 percent from 72 percent last year. Analysts believe Russia may produce over 90 million tonnes of grain, while Italy and Germany are also expecting more feed wheat crop than expected.

Last year, EU farmers and feed producers imported 20.1 million tonnes corn and sorghum, up from 6.2 million tonnes in the previous season, due to Europe's poor 2007 grain yield and high wheat prices. The EU imported about 14.65 million tonnes of corn, up from only 5.56 million tonnes in 2006/07. Sorghum imports from the US totalled 5.5 million tonnes in 2007/08 compared to only 646,000 tonnes in 2006/07.

The EU will simply not need the huge imports of corn and sorghum and cheap Ukrainian feed wheat will be first choice for the EU unless corn prices and shipping costs fall dramatically, according to an analyst.

Traders said on Monday (August 11, 2008) that EU importers have bought 300,000 tonnes of mainly Ukrainian feed wheat in the past few days, a shipment size that is unusually large.