December 5, 2008

Germany has harvested a bumper corn crop this year but marketing it will be difficult due to competition from other feed grains, traders and analysts said on Thursday (Dec 4, 2008).

Coupled with a big corn crop in neighbouring Hungary, the harvest could mean EU would expand corn exports to third world countries or push more barley into EU intervention purchases, they added.

German corn harvesting is complete apart from a few minor areas in the east. Official estimates say the crop will rise by 1.1 million tonnes on the year to 4.9 million tonnes.

Hungary, a big surplus producer, is forecast to harvest 8.7 million tonnes, up 4.7 million tonnes on the year.

The EU has also imposed a limit on corn intervention purchases of 700,000 tonnes in the current 2008/08 season as part of a programme to stop the build up of large stocks of unsold cereals.

German grain trading house Toepfer International estimates the EU's corn crop this year will shoot up to 61.4 million tonnes from 47.4 million tonnes in 2007, when the harvest was reduced by poor weather.

Corn has a high energy value and it is likely to be favoured by feed makers over barley or rye. But aggressive corn offers to feed makers would push barley out of this market and possibly into intervention, one German trader remarked.

The EU is still committed to buying unlimited volumes of wheat and barley in its intervention programmes in which it supports farmers by guaranteeing it will buy some crops at a minimum price.

EU corn prices could face a free fall if farmers market too quickly, an analyst said. This could make EU corn more competitive in Middle Eastern export markets, where it is still seen as too expensive compared to feed wheat, he added.