European corn buyers express concern as China competes for supply from Brazil

Corn buyers in Europe are growing concerned that their competitively priced supply from Brazil will dry up as China begins to buy from there too.

China, which generally purchases from the US and Ukraine, is interested in Brazilian corn. China has sought to diversify its sources of corn imports after Russia invaded Ukraine on Feb. 24 rather than relying mostly on the US. Key export agreements between China and Brazil were concluded in May, with the first shipment of 67,000 mt of Brazilian corn en route to China on Nov. 23.

“With the slowdown in Ukraine, it makes sense that China has opened its doors to Brazil,” a trader said.

As a result of Russia’s invasion of Ukraine, Ukraine’s total grain exports in the marketing year 2022-23 are estimated at 15.5 million mt, down 42% year on year, according to data from the US Department of Agriculture.

Due to exceptionally dry weather during key growing months, Europe has been importing historically large volumes of corn, 11.54 million mt as of Nov. 21 in the current MY 2022-23 from 5.09 million mt in the same period last year, the EU Crop Observatory data showed.

Please check below the track record of Brazilian corn exports and some of their most important destinations:

Brazilian Corn Exports (1005) | Jan 2017 to Oct 2020 | WTMT

Source: DataLiner

Main Destinations for Brazilian Corn Exports (HS 1006) | Jan-Dec 2019 | WTMT

Source: DataLiner (click here to request a demo)

Brazil is the main corn supplier to the EU. As of Nov. 21, the country has exported close to 6 million mt of corn in MY 2022-23 to the bloc, followed by Ukraine, which has exported 4.8 million mt, according to the EU Crop Observatory. Spain and the Netherlands are the largest European corn importers.

EU corn is, therefore, susceptible to any changes in prices and supplies from Brazil as a key supplier to the continent.

“[As China competes] for Brazil, this is going to be an issue as we will start seeing prices go up massively,” another trader said. “It will be a big blow for the European grain market.”

China is expected to buy 5 million mt of corn from Brazil in 2023, according to Anec, Brazil’s grain exporting group. After the first journey on Nov. 23, additional shipments are anticipated in the coming weeks.

“Everyone is wondering how much they will buy, as this is the first time any kind of volume is going to be massive,” a source said.

Source: S&P Global

To read the full original article, please access: https://www.spglobal.com/commodityinsights/en/market-insights/latest-news/agriculture/112822-european-corn-buyers-express-concern-as-china-competes-for-supply-from-brazil

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