Lower availability of corn could rise use of wheat in EU

Last week, the German Farmers' Cooperative (DRV) predicted a 24% year-on-year slump in the German corn crop, while the USDA and the European Commission forecast a more than 15% slump for the EU. Because of the refusal to accept genetically-modified crops, only a few countries - first and foremost Ukraine - are available for higher EU imports. Even there the crop is expected to remain below the level of the two previous years, however. Accordingly, the EU could resort increasingly to using wheat for animal feed. 

The German Farmers' Association has provisionally reported a crop of 24.6 million tons of wheat, following a figure of 27.4 million tons last year, because the crop proved significantly below average apart from in the far south and far north of Germany, notes Commerzbank. For the EU as a whole, the European Commission estimates that the soft wheat crop is down by 6.3%. Due to the ample global supply and the competition from the Black Sea region, however, the European wheat price is hardly likely to profit from this, though it could well benefit from the corn market, as corn has suffered considerably from the hot and dry conditions.