Spain Sources Large Amounts of Ukrainian Corn
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Corn is grown mainly under irrigation in Spain. The higher input costs (energy and fertilizers) and irrigation water limitations in particular river basins have forced the area down. For instance, farmers in the Guadalquivir basin (Andalucía) faced limits for irrigation purposes for the second consecutive year in crops such as cotton, Corn, and rice, whose area has reportedly been halved in this autonomous region. Moreover, competition by less input-intensive and highly demanded sunflower plantings in irrigated and non-irrigated land has resulted in what Post estimates as a 12 percent grain-Corn area reduction in 2022 compared to the previous marketing year.
Spanish total grain production (including winter grains and Corn) in MY2022/23 is anticipated to decline significantly from the sizeable crops achieved in the close-to-record MY2021/22 season when a sizeable crop was harvested. In the case of Corn, primarily grown under irrigation, the production reduction stems from the 12 percent decline in planted area, which could lead to a grain Corn production of 3.6 MMT. Without official estimates, industry sources concur that winter grain production will be well below last year’s figure and average levels in all growing regions. Spain’s MY2022/23 total grain output, including Corn, could be as low as just 17.6 MMT.
Total grain consumption in MY2022/23 is currently projected at 34.5 MMT, down from the 36 MMT estimate for MY2021/22. The country’s grain users are struggling with the commodity price surge initiated in the second half of 2021 and aggravated by Russia’s invasion of Ukraine in February 2022 and soaring energy costs. However, in MY2021/22, only slight downward corrections are being reported.
Animal feed is Spain’s primary grain destination, accounting for over 75 percent of the country’s demand. Spain’s feed compounders supply the dynamic domestic livestock sector. Livestock products demand hinges on the evolution in export markets demand, led by other EU Member States and China, as well as internal household and Hotel, Restaurants, and Institutions (HRI) demand. In MY2022/23, if the tight market situation continues, shrinking livestock producers’ margins could ultimately result in demand destruction, pressuring grain feed uses down.
However, limited pasture availability is another factor that supports the stability of feed demand. Spain’s Feed Compounders Association (CESFAC) anticipates a 4 percent reduction in industrial feed production in CY2022. In terms of the preferred type of grain, given the price differential, wheat is expected to see its competitiveness eroded against Corn, which is anticipated to remain the preferred grain for feed purposes.
In 2022, bioethanol production in Spain was to remain strong in response to the expanding consumption mandates and the recovery in the domestic gasoline pool, despite the high grain and gasoline prices. Bioethanol production in MY2022/23 hinges on the continuation of high energy and Corn prices, which have the potential to ultimately erode bioethanol producer margins, as well as demand evolution (gasoline pools and consumption mandates) in domestic and export markets.
Corn Import in Spain
According to the AgFlow data, Spain imported 1.6 million tons of Corn in Q1 2023. In March, the key suppliers were Ukraine (0.5 million tons), Romania (0.1 million tons), Bulgaria (65,000 tons), and Argentina (40,000 tons). Demand contraction in MY2022/23 could partially negate the need for more significant grain imports, given the well-below-average in-country grain crop anticipated. Spain’s grain imports are forecast at 15 MMT, down from the 18 MMT imported in MY2017/18, when high consumption levels and poor in-country grain yields coincided.
In MY2022/23, Spain’s grain imports may be affected by the looming prospects regarding Ukraine’s grain exports arriving in western EU destinations, concerns over other EU Member States’ grain production, and anticipated shorter domestic crop. Consequently, Brazilian safrinha Corn supplies in summer will be particularly critical in the transition to the new Northern Hemisphere Corn crop.
Other sources: USDA
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