EU Corn Crop Lower
- Last week, USDA lowered forecast production for the European region by 500,000 tonnes from 68.3 million tonnes to 67.8 million.
- Reductions for France and Romania outweighed increased forecasts for Poland, Hungary and Italy.
- AgriMer reported crop conditions in France fell to 65% good to excellent from 74% previously.
- Sparks Polska forecast Poland’s corn production will increase to 4.6 million tonnes, up about 2% from last year.
- Germany's corn harvest will increase by 9.2% on the year to 4.0 million tonnes according to its farm co-op association.
- Ukraine’s grain traders union lowered its forecast of the corn crop to 36.4 million tonnes from 38.9 million previously.
FBN’s Take On What It Means: Late season hot and dry conditions continue in parts of Europe and are affecting potential corn production. The EU depends on Ukraine for much of its corn imports, where exports are expected to be lower than previously forecast, but still larger than last year. This could benefit the US; USDA raised its US export forecast in the latest WASDE.
Brazil Ethanol Quota to Expire
- Brazil’s tax-free ethanol import quota of approximately 200 million gallons is set to expire on August 31.
- The entire quota is used to import US ethanol and there is pressure by the country’s farm and ethanol lobbies to not renew it.
- Brazil currently institutes a 20% tariff on ethanol imports above the quota.
- Brazil is the largest buyer of US ethanol, with exports to Brazil of 340-500 million gallons annually over the last three years.
- Through June, US ethanol exports to Brazil were 177 million gallons vs 220 million last year.
FBN’s Take On What It Means: The coronavirus slowdown has affected the ethanol industry in Brazil much like it has here in the US. US ethanol producers and the White House expect a renewal of the tax-free quota and President Trump has asked the Brazilian government to eliminate any tariff on imports above that quota. The battered ethanol industry has been able to recover much of its pre-COVID business and exports are needed to maintain the rebound.
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