Drought and excessive heat drastically cut European corn output this year, leading to a corn deficit of up to 18.25 million metric tons (718.5 million bushels), according to the U.S. Department of Agriculture (USDA) – and opportunities on the global export market.
Although it is the world’s largest producer of corn, the United States has not been a major exporter of the commodity to Europe in recent decades due to restrictions stemming from slow approvals of new biotech traits.
Instead, South American and Black Sea origins are common for EU buyers, with Spain importing 6.1 million tons (240.1 million bushels) of corn in 2014, 2.6 million tons (102.4 million bushels) of which originated from Ukraine. Portugal imported 1.7 million tons (66.9 million bushels) of corn during that time, much of it from Ukraine as well.
While the U.S. Grains Council (USGC) continues to hear from buyers in the European market that they would like to purchase U.S. corn because of its known quality and consistency and U.S. logistical advantages, biotech restrictions continue to stymie those sales.
The ongoing Transatlantic Trade and Investment Partnership (T-TIP) negotiations could help alleviate these challenges. The Council represents the U.S. industry in the T-TIP talks with the priority objectives of achieving market access and progress on biotechnology issues.
“What we are seeking is predictability of the EU risk assessment and approval process by urging them to adhere to their legislated timelines and develop a workable low-level presence policy,” said USGC Director of Trade Policy and Biotechnology Floyd Gaibler.
In the meantime, the Council is working to build and maintain contacts in the EU to ensure interest in U.S. grain products when the agreement is finalized. USGC Manager of Global Trade Manuel Sanchez visited Spain and Portugal last month to perform a market assessment with consultant Loyola Torán, who is based in Spain.
The goals of this outreach were to better understand EU market dynamics, assess the potential for future sales when biotechnology-related restrictions are eased and be in touch with industry organizations, trading houses, local feed associations and the U.S. embassy agriculture attaché in Spain.
“Both Spain and Portugal are net importers of coarse grains and co-products, and as domestic production isn’t sufficient to fulfill internal demand, there are opportunities for exports into the Iberian Peninsula,� Sanchez said.
Sanchez and Toran also met with representatives of a large ethanol producer that helps set the tone for corn sales into the Spanish market and has been deeply affected by supply issues related to the drought.
Information from this assessment and others in the region are critical for the Council’s staff working on trade policy issues and to develop marketing plans for the coming years.
Click here to learn more about the ongoing T-TIP talks.