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European Corn Imports Seen Expanding to Second-Highest on Record

European Union corn imports may be the second-highest on record this season after drought parched crops and a surge in wheat exports curbed domestic grain supply.

The EU issued licenses to import 3.6 million metric tons of corn since the marketing year began July 2, more than twice the amount a year ago, data from the 27-nation bloc show. Purchases will rise 59 percent to 10 million tons, the second highest for data to 1999, the International Grains Council says. Shipments may reach 12 million tons, said Dan Basse, president of AgResource Co., a research company in Chicago.

EU buyers are competing in a market roiled by dry weather from Australia to Europe to the U.S. Futures traded in Chicago, a global benchmark, reached a record in August. Prices for wheat, an alternative livestock feed, also surged because of concern that grain from the Black Sea region will run out, boosting demand for EU supply. Licenses to export wheat rose 34 percent in the past four weeks, European Commission data show.

“There were problems in the southern areas, especially Romania, where crops looked very poor, and in Italy and Hungary as well,” said Nathan Kemp, an economist with the London-based IGC. “There’s a shortfall this year, plus with the wheat market price differential, it makes sense to export wheat, so that takes it away from feed channels.”

Corn surged 28 percent this year on NYSE Liffe in Paris, outpacing the 17 percent increase on the Chicago Board of Trade. U.S. futures reached a record $8.49 on Aug. 10 and averaged $6.86 since the start of January, exceeding last year’s all-time high. The Standard & Poor’s GSCI Agriculture gauge of eight commodities rose 11 percent this year.

European Commission

The IGC’s forecast for EU corn imports is 85 percent higher than the U.S. Department of Agriculture’s most recent estimate. Purchases of 12 million tons would make the bloc the world’s second-biggest buyer after Japan. EU corn output fell 19 percent this year, according to the European Commission.

The extra supplies are most likely to come from Ukraine and South America, said Jeff McPike, a grains trading manager at Cefetra BV in Rotterdam. The U.S. probably won’t ship more because of the EU’s restrictions on most genetically modified varieties prevalent in North America, he said, estimating imports at as much as 11 million tons.

Ukraine supplied the EU with almost 600,000 tons of corn in the three months through the end of September, more than 13 times the amount a year earlier, according to the IGC. Argentina has been the second-largest supplier at 74,400 tons, from 42,400 tons in 2011. The EU approved imports of Syngenta AG’s MIR162, a genetically modified corn variety, in October and that may allow more shipments from Brazil, Kemp said.

Corn Exporters

The planting of Brazil’s second corn crop in January and February may be delayed after dry weather postponed soybean sowing this year, Kemp said. The U.S., Argentina, Brazil and Ukraine are the largest corn exporters.

The EU issued licenses to export 1.93 million tons of wheat in the four weeks ended Nov. 27, from 1.45 million tons a year earlier. Egypt, the biggest importer, accelerated purchases from France since September, after favoring Russia and eastern Europe supply earlier in the season.

Combined global inventories of corn and wheat may drop to 292.2 million tons at the end of this season, the lowest in five years, according to the USDA. World feed demand for the two grains, while down 1.9 percent from last year, will still be the second-highest on record at 639.5 million tons.

“For the next six to nine months it’s very difficult to understand how there’ll be enough feed,” Basse said. “There’s really not a lot of other options available to the EU in terms of feed supplies, outside of feed wheat, of which there’s very little in the world.”

To contact the reporter on this story: Whitney McFerron in London at wmcferron1@bloomberg.net

To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net

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