South Korea Becomes Inseparable from Romanian Wheat
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Area planted for Grains in the EU in MY 2023/24 is expected to amount to 51.4 million Hectares (Ha), up from the 51 million Ha planted in MY 2022/23. Improved Grain prices expectations for MY 2023/24, steady EU demand for food or industrial uses, together with new facilities entering production, expanding capacity, or increasing products range, and a looming reduction in Ukraine Grain production, all contribute to projected expansion in EU Grains area for MY 2023/24. The increase in Grains area is most notable in Hungary, where area planted to Corn is expected to bounce back.
Wheat and Barley, more drought-tolerant than Corn, are expected to come forward in the crop structure. In MY 2023/24, the area planted for protein crops in the EU is also likely to expand, benefiting from this year’s exemption that allows crops to be grown in fallow land but also in normal cropland as a result of the implementation of new CAP 2023-27 eco schemes promoting crop rotation.
The shift towards less input-intensive oilseeds, such as sunflower, was initiated in MY 2022/23 and is expected to consolidate in MY 2023/24. Likewise, soybeans, which have lower nitrogen fertilizer requirements, are also projected to expand in MY 2023/24 at the expense of Corn. Conversely, the European Court of Justice’s (ECJ) decision not to allow exceptional authorizations for neonicotinoids in sugar beet plantings may prevent Corn areas from declining further. Interestingly, despite its resilience, the sorghum area in the EU continues to shrink.
The MY 2023/24 EU Grain crop is forecast at 284 MMT, up from the 267 MMT produced in MY 2022/23, when the summer heat and drought drastically trimmed yields. Russia’s invasion of Ukraine stressed the EU fertilizers’ supply chain, sending fertilizer prices to record high levels. However, according to the latest EU agricultural input prices dashboard, fertilizers prices, while still at high levels, have eased3 from the record highs registered in 2022. Moreover, high agricultural commodity prices justify the investment to secure a sizeable Grain crop with adequate protein content.
In MY 2023/24, EU’s total Grain exports are projected at 47.4 MMT, higher than in MY 2022/23 (42.3 MMT), as the anticipated recovery in the domestic Grain crop is projected to allow the EU to improve its export position of all main Grains (Wheat, Corn, and Barley). According to AgFlow data, Romania, one of the vital Grain exporters of the EU, shipped 4.6 million tons of Wheat in Jan-June 2023. The key markets were South Korea (0.4 million tons), Spain (0.2 million tons), and Iran (0.15 million tons).
Grain Consumption in the EU
Total consumption of Grains in the EU in MY 2023/24 is projected at 263.2 MMT, slightly up from the 262.3 MMT estimated for MY 2022/23. The outlook for Grain consumption in MY 2023/24 remains subject to the overall macroeconomic developments, the consequences of inflation, and inflation mitigation measures.
Animal feed is the EU’s primary Grain destination, accounting on average for over 60 percent of the bloc’s Grain consumption. In MY 2023/24, it is projected at 158.8 MMT, showing stability compared to the estimated consumption for MY 2022/23, under the expectation of stable feed prices and positive prospects for the EU poultry industry in 2023, as this meat is still generally more affordable compared to other animal protein sources.
Major Grains (Corn, Wheat, and Barley) account for 85 percent of Grains used in feed. In MY 2023/24, Corn remains the EU’s prominent feed Grain. However, the use of Barley is forecast to grow compared to Post’s previous estimate as the favorable price differential allows for an increased inclusion against Corn. Additionally, the increased soybean meal prices stemming from the drought in Argentina favor the use of alternative meals (rapeseed, sunflower, and palm kernel meal) and higher-protein content Grains in the feed formula like Wheat.
Other sources: USDA
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