Strategie Grains underlined the importance of Ukrainian corn exports for European buyers, as it downgraded again its forecast for the European Union’s drought-shrunken harvest of the grain.
The influential analysis group, which last month slashed its estimate for the EU corn (maize) crop by 10.0m tonnes to a 15-year low of 55.4m tonnes, on Thursday sliced off a further 2.5m tonnes.
The harvest downgrade to 52.9m tonnes reflected a further cut to the yield forecast, of 0.3 tonnes per hectare to 5.9 tonnes per hectare, on crop damage from persistent dryness and heat.
And the worsened production outlook has exacerbated a squeeze on corn supplies in Europe, at a time when prospects have dimmed for the US, the top exporter of the grain.
US officials on Monday downgraded by 415m bushels to 13.94m bushels (354.2m tonnes) their forecast for this year’s domestic harvest of corn, which has also suffered amid arid conditions.
The estimate for US corn exports in 2022-23 was cut by 100m bushels to 2.28bn bushels (57.8m tonnes).
“The European market is shaping up to be extremely tight – and with no prospect of significant relief from [the] world market either,” Strategie Grains said.
The squeeze will leave the region “extremely reliant on imports” from neighbouring Ukraine, “as well as from Brazil”, the second-ranked corn exporter.
In fact, “the ultimate level of Ukrainian maize exports now holds the key to potential equilibrium on the European market – and possibly on the world market, too,” Strategie Grains said, lifting by 1.4m tonnes to 10.4m tonnes its forecast for EU corn imports this season.
That would represent a marked increase from the 8.12m tonnes of Ukrainian corn imported last season, and the 6.54m tonnes the season before, although remain below the record purchases of 15.66m tonnes in 2018-19, according to European Commission data.
‘Could spell big trouble’
Strategie Grains’ comments follow a caution last week from Amis, the food market monitoring agency backed by the G20 group of nations and hosted by the United Nations, of the importance of Ukrainian corn exports, even as the country attempts to repel Russia’s invasion.
“Any disruption or further reduction in [Ukraine’s] exports could spell big trouble for maize markets,” Amis said.
Also last week, Vladimir Putin, the Russian president, complained over the extent of Ukrainian grain exports heading for the EU, under the UN-brokered agreement to safe passage for shipments – although many commentators, citing UN data, questioned his assessment.
UN data show that, as of Thursday, 3.06m tonnes of grain had been shipped from Ukrainian ports under the deal with Russia since it began taking effect early last month.
Of this, 1.62m tonnes was corn, of which 714,857 tonnes was headed for the EU – albeit with reports that some of this was heading ultimately outside the bloc.
European Commission trade data show total EU corn imports from Ukraine, including overland trade, at 1.78m tonnes in 2022-23, as started in July.