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July 29, 2020 | FBN Insights | Kevin McNew

EU Corn Production Set to Rise and Compete with U.S.

Unless China is set to expand imports, world prices will likely stay under pressure from increased production

EU Corn Production Set to Rise 

  • Strategie Grain projects the EU corn crop at nearly 66.5 million tonnes, up from 64.2 million last year.
  • The last forecast from the USDA saw EU production at 68.3 million tonnes.
  • SG reduced the yield forecast 3.7% from last year for France, which has struggled with less rain than normal.
  • However, production is forecast to increase to 14.9 million tonnes versus 12.3 million last year on a greater planted area.
  • AgroConsult projects Ukraine will produce 38 million tonnes of corn, up from 35.9 million last year.
  • The USDA attaché recently forecast production at 38.3 million tonnes.

FBN’s Take On What It Means: The weather forecast for most of Europe is non-threatening and if production forecasts hold, it will compete for export business with the U.S. China has been seen as a large buyer recently, covering their World Trade Organization quota. Unless China is set to expand imports, world prices will likely stay under pressure from increased production. 

EU Wheat Harvest Comments 

  • Strategie Grain projects the EU soft wheat crop at 130 million tonnes, down sharply from 147 million last year.
  • The consultant lowered its projection for France, Romania and Bulgaria by 3 million tonnes overall.
  • The cut was partially offset by an increase of 1.5-2.0 million tonnes for Poland, Germany and the Baltic States.
  • For France, SG reduced the forecast to just under 30 million tonnes, down from 31.6 million and below the 40 million seen last year. 
  • A farm cooperatives survey projects Germany's 2020 wheat harvest will fall 2.6% on the year to 22.46 million tonnes.
  • Sparks Polska increased its wheat crop forecast for Poland to 11.6 million tonnes, up 4% from last year. 

FBN’s Take On What It Means: Europe’s harvest results have been a mixed bag so far. Lower production in France, a major exporter, could lead to more business for others, but the US struggles to be competitive to typical destinations due to higher freight costs. It will likely take a larger production problem in the Southern Hemisphere’s upcoming season to increase exports and move prices significantly higher. 

 

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