EU corn imports are now forecast to reach another record in 2018/19 based on several factors.
First, the supplies of key feed grains are limited in the domestic market. Wheat supplies in the European Union and Black Sea region are very tight, triggering additional demand for alternative feed grains. Shrinking corn acreage, smaller crop forecasts for barley, oats, and rye, as well as reports of damaged pasture in northern Europe due to persistent hot and dry conditions only exacerbate the feed deficit.
Second, the magnitude of domestic livestock production will continue to support demand for grain feed. Other than 2014/15, when imports plummeted due to a record corn crop and a surge in feedquality wheat supplies, corn imports have been steadily expanding due to domestic demand for feed grains in the livestock sector. The larger availability from adjacent producers, as well as the climbing price advantage, will contribute to the EU’s corn usage in feed.
Third, corn should continue to be price-competitive. Anticipation of a bountiful U.S. corn crop, compounded by price pressure in the U.S. soybean market, is weighing on global corn prices. On the other hand, driven by tight supplies in the European Union and Black Sea, global wheat prices have jumped sharply since late June, reducing the appeal of wheat feeding in the European Union while supporting corn prices.
Reported forward prices of wheat and corn in the upcoming months show that feed-quality wheat, as well as feed barley, are not competitive. This indicates price competitiveness of corn is likely to stay throughout 2018/19, raising EU’s usage and imports.
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With expected growth in the European Union, global corn imports are projected to reach a record in 2018/19. EU imports are likely to be filled from nearby suppliers such as Ukraine and Serbia, as well as South America.
Despite not having full market access to the European Union due to biotech-related issues, U.S. exports will still benefit from growing global demand. The United States will continue to be highly competitive, as key competitors such as Brazil and Argentina struggle with domestic policy issues and tight old-crop supplies.