Global Markets: Coarse Grains – EU Corn Imports Remain High with Smaller Crop

Under withering drought, the European Union is anticipating the smallest corn crop since 2007/08 with production forecast down 21 percent year-over-year. As a result, imports reached substantial volumes in the final weeks of 2021/22 and the European Union is forecast to return as the world’s largest corn importer in 2022/23 as China eases back its imports.

As EU demand for imported corn has surged with a poor crop, it has boosted its imports not only from Brazil, but also from Ukraine via the Black Sea grain corridor where uncertainty remains over its continuation. The European Union is also normally a nontrivial exporter of corn. With Romania, a major exporting member state, seeing a substantial decline in production, overall EU corn exports are forecast to drop sharply from 2021/22.

Global corn prices remain elevated and support the use of alternative grains for feed in the European Union. EU barley and wheat production are also down from the prior year, though not as dramatically as corn. These two grains are expected to modestly buffer the impact of lower domestic corn supplies for feed; however, overall grain feeding in the European Union is forecast to contract by 4 percent or nearly 7 million tons.

Adding to the difficult grain supply situation, the European Union is facing a severe outbreak of highly pathogenic avian influenza (HPAI), which has already resulted in the culling of around 50 million birds. Beef and pork producers in the European Union are also expected to scale back production in response to growing environmental restrictions and higher feed and energy costs which have tightened margins.

Paraguay Corn Exports Start Strong

In the first quarter of the 2021/22 marketing year (June 2022 – May 2023), Paraguay corn exports hit a record high of 1.5 million tons and August 2022 reached the highest single month volume in history.

First quarter

exports were last at a similarly high level in MY 2014/15 when Paraguay exported nearly 90 percent of its total production. Since then, both food, seed, and industrial (FSI) use – primarily ethanol – and feed use have grown. The current marketing year forecast for Paraguay corn exports is 2.7 million tons.

Overall, Paraguay corn exports are primarily destined for neighboring Brazil, whose livestock-producing southern states import corn from neighboring countries due to lower transport costs than shipping from the higher corn production regions of Brazil such as the Central-West states.

Smaller volumes have been reported to Uruguay and Chile. Outside of South America, South Korea has become a consistent market in recent years, alongside Saudi Arabia and some North African countries. Notably, in August, Paraguay reported nearly 300,000 tons of exports to Argentina, far eclipsing any previously reported monthly or even yearly volume to the neighboring country.

Argentina’s need to import corn is low and the large August volume reported from Paraguay to Argentina is likely for transshipment to other countries. According to port data published by Agencia Marítima NABSA, Argentine ports shipped around 300,000 tons of Paraguay-origin corn in August. About a third was destined for Chile and Peru. Most of the remainder was shipped outside of South America to South Korea, Saudi Arabia, Morocco, and Tunisia.

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