Europe: Germany Ships Tons of Wheat to Guinea
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In Europe, the total Grain area in MY2022/23 was expected to amount to 51.7 million Ha, somewhat below MY2021/22 levels. To a much lesser extent, only Barley and sorghum are expected to exceed previous season planting levels. A price-driven recovery of rapeseed plantings has reduced Wheat area across the EU, most notably in France. Conversely, the area planted to Grains expanded in Hungary, driven by the growing in-country opportunities in industrial uses, and in Ireland, as the country gears up for increased lower-yielding spring-Grains plantings.
In the case of corn, planted area in MY2022/23 is projected down, despite good price signals, and may shift towards less input-intensive spring-planted crops, such as sunflower. The MY2022/23 EU Grain crop is currently forecast at 286 MMT, down from the 292.9 MMT estimated for MY2021/22, driven by the reduced area planted to Grain and the more conservative yield expectations.
Total Grain consumption in MY2022/23 is projected at 259.4 MMT, down from the 260.6 MT estimated for MY2021/22. The initial favorable outlook for Grain consumption in MY2021/22 was revised. While less optimistic prospects apply to feed and industrial uses, food consumption holds some expansion potential. EU’s feed use of Grains in MY2022/23 is projected at 156.1 MMT, down from the 157.7 MMT estimated for MY2021/22. MY2021/22 feed production was also expected to contract, considering the eroding margins, aggravated by difficulties procuring Grains from the ongoing conflict in Ukraine.
Europe is still a strong player in exports of Wheat and Barley in a growing world market. For instance, according to the AgFlow data, Germany shipped 32,053 tons of Wheat to Guinea in Jan-Feb, followed by Morocco (19,700 tons) and Suriname (5,500 tons). Competition, especially from the Black Sea region, was expected to increase in the coming years, but due to the impact of the war in Ukraine on production and trade routes, it is unlikely that these expectations will be met in the short term.
EU Posts anticipate consolidation and decapitalization of livestock production as reported in the latest EU Livestock GAIN report. Conversely, according to the latest EU Poultry GAIN Report, despite the poultry industry’s strong dependence on imported feedstuff, the price competitiveness of poultry meat compared to alternative meats means that feed consumption by this industry is anticipated to remain unchanged.
In MY2022/23, EU feed use of Wheat and Barley is forecast to remain stable in MY2022/23, while corn and little Grains feed uses will account for the bulk of the downward correction of total Grain feed uses. According to the EU representative market prices data, Russia’s invasion of Ukraine aggravated the escalation in Grain prices that started in the summer of 2020. For the second half of MY2021/22, both corn and Wheat have lost competitiveness against Barley, which is currently the cheapest of internationally traded feed Grains.
Food, Seed, and Industrial Grain use in Europe
Total Food, Seed, and Industrial (FSI) Grain use in the EU is expected to expand to 103.2 MMT in MY2022/23. In MY2022/23, food use is expected to increase, given the projected population growth and more significant consumption in the Hotels, Restaurant, and Institutions (HRI) sector as COVID-19 pandemic related restrictions are eased, foreign tourism picks up, and the preference for local Grain-based foods continues to expand
Conversely, industrial use of Grains in the bioethanol and starch industry is projected to decrease in MY2022/23. Industrial Grain uses for MY2021/22 have been revised compared to our previous Post estimate. Prospects for starch and isoglucose uses of Grain remain positive in main producing countries such as Hungary, Austria, and Bulgaria. The market size of the EU’s Grain-dependent bioethanol industry is a factor in total gasoline demand and consumption targets. The current high gasoline prices make blending beyond mandates more competitive.
Other sources: USDA
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