Food for fuel: Brazil, US to lose out as big EU wheat crop looms
By Michael Hogan
HAMBURG, Aug 14 (Reuters) - A huge feed wheat crop in the European Union this summer is likely to cut imports of Brazilian corn and U.S. sorghum, analysts said on Thursday.
Brazil and the U.S. together sold 20.1 million tonnes of corn and sorghum last year, up from 6.2 million tonnes the previous season as EU farmers and animal feed makers turned to imports after Europe's poor 2007 grains crop.
But this summer Brazilian and U.S. sales are likely to be replaced by cheap feed wheat from Ukraine and the EU itself.
"The corn exporters such as Brazil will be the losers from the large feed wheat crop," said Oliver Balkhausen, grains analyst at German commodity analysts F.O. Licht.
Others saw Ukraine gaining market share.
"The big wheat crop in the EU will mean a large cut in import requirements. I expect a wide-scale shift from Brazilian corn and U.S. sorghum to Ukrainian feed wheat," he said.
French analyst Strategie Grains on Thursday estimated the EU's soft wheat crop this summer will rise to 133.9 million tonnes, up 22 million tonnes on the year. [ID:nLE729061]
"The proportion of feed wheat is set to be higher than average in the east EU countries," Strategie Grains said.
LOWER UKRAINE WHEAT QUALITY
The share of milling wheat in Ukraine's 2008 wheat crop is likely to fall to 30 percent this year, the lowest level in a decade, against 72 percent last year, analyst UkrAgroConsult said.
Analysts believe Russia may produce over 90 million tonnes of grain compared to 81.8 million in 2007 and Agriculture Minister Alexei Gordeyev expects a good feed grain harvest.
Italy and Germany also expect big crops but bad weather means more feed wheat than expected there too.
"It appears certain that the EU will have a smaller corn import requirement following the larger feed wheat crop," said Balkhausen. "We have in Europe a larger wheat harvest of generally low quality and more of this will go for animal feed."
"Ukraine and Russia also have large feed wheat harvests and a large volume of this is likely to be sold in Europe as feed, especially from Ukraine."
"The result is that less corn and less sorghum will be imported into Europe than last season."
High wheat prices meant the EU imported a huge 14.65 million tonnes of corn in the July 2007/June 2008 season against only 5.56 million tonnes imported in 2006/07.
Sorghum imports, including large volumes from the U.S., totalled 5.5 million tonnes in 2007/08 against only 646,000 tonnes in 2006/2007.
"Europe will simply not need the huge imports of corn and sorghum we have been seeing in past months," an analyst said.
"Cheap Ukrainian feed wheat will be the first EU choice unless corn prices and shipping costs fall dramatically. We are already seeing this Ukrainian selling pressure."
Traders said on Monday that unusually large purchases of 300,000 tonnes of mainly Ukrainian feed wheat had been made in past days by EU importers.
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(Reporting by Michael Hogan; additional reporting Pavel Polityuk in Kiev, Aleksandras Budrys in Moscow and Svetlana Kovalyova in Milan. Editing by David Evans) BusinessRelated information follows Ads by Google |
