Europe’s pigs, chickens and cattle are eating more foreign-grown corn than ever, and the timing couldn’t be better.
A prolonged global glut has sent prices plunging from record highs in 2012, which means plenty of cheap feed grain for a major consuming region even after a drought damaged crops in France, the European Union’s biggest corn exporter. The 28-nation EU may import a record 16 million metric tons during the year that ends in June, up 83 percent from a year earlier, the U.S. Department of Agriculture said Feb. 12.
“There is a lot of grain around everywhere,” said Nico Treurniet, who owns a livestock-feed producer in the Netherlands called Treurniet Mengvoeders BV, founded by his great-grandfather in 1867. “Corn is relatively cheap.” He said he has been adding corn to rations, along with more wheat following a bumper European harvest of that grain this season.
Feed Glut
Corn harvests around the world will exceed demand for a fifth straight year, according to the USDA. Corn futures in Chicago are down about 56 percent from a record in 2012, while prices in Paris have tumbled 25 percent since July 1. Cheaper grain is reducing costs for meat and dairy producers who rely on crops for livestock feed. It’s also helped send global food prices tracked by the United Nations to their lowest since 2009.
The EU, the third-largest corn consumer after the U.S. and China, produced 57 million tons last year, the least in six years, with yields hurt by hot and dry conditions that wilted crops across southern Europe. With less home-grown supply available from France, Hungary and Romania, livestock producers are relying more on imported grain from Ukraine, Brazil, Canada, the U.S. and Russia.
“The picture has changed a lot from 2014-15,” said Vito Martielli, a grain and oilseeds analyst at Rabobank. “This drop in production is compensated by imports.”
Rising Imports
Import licenses totaled 9.14 million tons as of Tuesday, up 56 percent from a year earlier, EU data show. Dutch import commitments stood at 2.49 million tons, 1.18 million ahead of last year’s pace.
Ukraine is by far the biggest supplier, accounting for more than half of imports. A decline this year in the country’s currency, the hryvnia, against the euro makes supplies even more competitive with those priced in dollars, said Matthe Vermeulen, president of Dutch grain-trader association Het Comite van Graanhandelaren.
“With low freight rates, it’s quite cheap to bring corn from Ukraine,” said Rory Deverell, a senior commodity risk manager at INTL FCStone in Dublin.
The EU keeps about 148 million pigs and 88 million cows, and reared 6.3 billion chickens last year, according to the bloc’s statistics office. Those farm animals will increase grain consumption by 0.6 percent this year to 173 million tons, or about 9 percent of global output, excluding rice. While Europe is a net exporter of wheat and barley, it doesn’t produce enough corn to satisfy demand. Livestock also are fed domestically produced sugar-beet pulp and rapeseed.
Cheap Grain
But with prices so low, European livestock are eating more corn and wheat. The total grain component of standard feed rations for dairy cattle has increased to 52 percent of daily rations from 29 percent a year earlier, according to Gerrit Remmelink, a researcher at Wageningen University in the Netherlands. Feed makers have switched from sugar-beet pulp and rapeseed because they’re more expensive, he said.
About 30 percent of a standard dairy-cattle ration was corn this month, up from 29 percent a year earlier, Remmelink said. It’s even bigger for wheat, which went from zero to 22 percent, he said, after European production surged to a record 151.3 million tons last year and prices in Paris fell to the lowest since 2010. Feed pellets also contain minerals and vitamins, as well as sugar byproducts molasses or vinasse to help process the feed.
“In the past two to three months, imported corn has been a lot more competitive than feed wheat and French corn, and that’s why the imports have been high,” said Paul Gaffet, an analyst at Offre & Demande Agricole.
Adding corn to a dairy cow’s nutrition can boost milk production, while the carotene in the grain means laying hens produce eggs with attractive yellow yolks, said Treurniet, whose company started as a feed mill north of Rotterdam. When corn gets cheaper, “it quickly becomes a better raw material than barley,” he said.
“The feed makers have got a taste for corn, with a lot of rations around corn, so they’re sticking with that despite the low wheat prices,” Deverell said. “For the last two seasons, corn has been consistently of high quality, high energy value. If you’re a ruminant feeder on a farm, corn looks right in a ration.”
By: Associated Press
Source: AgWeb.com