Big European maize crop to cut feed costs, imports

By Michael Hogan

HAMBURG, Sept 4 - Europe can expect a bumper maize (corn) crop this autumn, which should cut animal feed costs and reduce imports from Brazil, traders said on Thursday.

French grains analysts Strategie Grains has forecast the European Union's maize harvest will rise 25 percent on the year to 59.7 million tonnes. Germany's largest grain trading house Toepfer International expects a crop of 57.2 million tonnes.

"The winners will be the livestock farmers," said a German trader. "They have suffered badly from high prices in the past year but the feed cost outlook has swung around in the past few weeks."

Toepfer estimated the EU will import only 4 million tonnes of Brazilian maize in the 2008/09 season, dramatically down from the 13 million tonnes in 2007/08.

Farmers across Europe greatly increased maize and other grains plantings last winter to cash in on soaring cereals prices.

Prices have dropped sharply as the arrival of the large crop approaches. Paris maize futures have fallen more than 25 percent since the end of June. German maize prices have dropped to 170 euros a tonne for September delivery from 225 a tonne in early August.

Official estimates say Germany's maize crop will rise by a dramatic 28 percent on the year to 4.8 million tonnes.

France, the EU's largest maize producer, is expected to harvest around 14.5 million tonnes against 14.4 million last year. Poor yields mean France's rise is little changed but the country's other grains crops are up sharply.

DOWNWARD PRESSURE

Toepfer forecasts major exporter Hungary will harvest 8.5 million tonnes against 4.0 million tonnes last year and this also likely will depress prices.

"Downward pressure on prices is likely to come from Hungary this year as the country tries to sell its large crop," one European trader said. "This crop is bound to be offered aggressively to feed makers in west Europe."

Maize harvesting has started in northern Italy, Europe's second-largest producer, and the crop is expected to be 10 percent to 20 percent larger than last year's 9.85 million tonnes, traders said.

"With this large domestic crop, the EU will not need such large purchases from Brazil in the coming year and will probably turn to Ukrainian and other Black Sea region supplies," one trader said.

Russia expects a record maize crop this year due to a drastic increase in sowed area and higher yields.

"We believe that maize output this year may be somewhere between 5 and 6 million tonnes, which is a record volume. Even in the 1960s Russia did not produce this much," said Dmitry Rylko, director of Russia's Institute for Agricultural Market Studies.

The area sown with maize this year rose to 1.8 million hectares from 1.57 million last year.

Ukraine is likely to increase its maize crop by about 35 percent to 8.5 million tonnes in 2008 from 6.3 million in 2007.

Analysts also have said an increase in the harvest may lead to higher Ukrainian maize exports this season, at 2.7 million tonnes compared with 1.5 million in 2007/08.