On the back of last year’s severely reduced Ukrainian harvest, EU maize (corn) prices shot up.
This was a direct consequence of the fact that Ukraine is one of the world’s only two significant suppliers of non-GM (genetically modified) corn.
The late planting of maize throughout Brazil, the other main supplier of non-GM corn to Europe, means that supplies to the EU from that part of the world, could well be reduced later this year.
Dependence on Ukraine for maize
According to Sébastien Mallet, CEO of the international grain marketing consultancy ODA, a perfect storm could be created where supplies of corn to the EU are concerned, if this year’s Ukrainian harvest comes in below normal levels.
Mallet made these comments while addressing a webinar earlier this week. He commented:
“Thankfully, the signs are positive that corn plantings in Ukraine are currently on track. However, the fact remains that the EU is now highly dependent on one corn source over the next 12 months.”
Mallett confirmed that grain prices – corn wheat and soya – will remain extremely volatile over the coming years.
This follows on from two periods of market volatility that have characterised the first two decades of the 21st century.
He said: “The world’s demand for protein continues to increase by around 4% per annum. Increasing yields will not be enough to meet this demand.
“The response to this challenge over recent times has been the opening-up of new planting areas. And we have seen this happening in Brazil and Argentina.
“But the scope to further develop new farm land opportunities in South America is limited. Brazil, for example, will not want to cut down all of the Amazon rainforest in order to grow soya and corn,” he added.
Potential for grain in Africa
Mallett believes that the potential to develop new grain growing opportunities in Africa will be developed over the coming years.
“However, it will take very large sums of money to develop these resources. This will be generated on the back of future grain sales,” he explained.
“We have seen in the past that world grain markets have settled at higher levels than would have been the case prior to periods of significant volatility.
“This will also be the case as we look to the future,” he said.
Chinese demand
According to Mallett, China has seen a tremendous growth in feed demand over the past three years.
“The country’s pig industry has been revolutionised in the wake of the African Swine Fever (ASF) outbreak. Currently, China is importing around 30 million tonnes of corn. This represents about 10% of all the corn traded in world markets.”
Turning to the prospects for EU wheat in 2021, Mallett confirmed that the recent rains would serve to boost yields across Europe.
“There had been fears that output would be severely reduced on the back of the very dry and cold weather that impacted on all European countries throughout the entire month of April,” he concluded.