France's corn shortfall lands on its European customers

FranceAgriMer cut the French corn crop again this week, by 1.46 Mt to 6.63 Mt, about half of last season's 12.99. The grain that actually reaches the market is 0.71 Mt lower than in the September report, and virtually all of it came out of exports and end-of-season stocks: exports lose 0.37 Mt, stocks 0.33, while domestic use barely moves.

France feeds itself first

Over the whole season the pattern is starker. Collected grain falls from 11.6 Mt last year to 6.2, and feed mills, starch plants and other domestic users see their supply trimmed 11%, to 5.57 Mt. Exports are cut 64%, to 2.12 Mt. The 2022 drought had asked the same 11% of domestic users, and exports had then given up nearly a third.

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Very little of that export goes overseas. Buyers outside the EU have taken between 0.14 and 0.59 Mt of French corn a year since 2017, and get 0.19 this season. The EU takes the rest, close to nine tonnes in ten in a normal year, and that is where the cut lands: 1.83 Mt this season against 5.22 last year, little more than half of what France shipped to its EU neighbours even in 2022.

The price is already sending buyers elsewhere

With 84% of the crop harvested by week 40, the market is still paying up for nearby corn. Bordeaux trades 9 €/t over Euronext November, where it stood 4 under at the same date last year, and on Tuesday the November contract gained 12 €/t to 289 while March added barely 2.

For a buyer outside France the comparison is blunter. At the end of June, French corn at its own port and Argentine corn landed in Europe were both priced at 255 $/t. French corn is now at 348, about 88 over both Argentine and US cargoes delivered to Europe.

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Where the replacement has to come from

Our reading is that France's European customers are being priced onto imports, and the origin that would most naturally replace French corn is late. Ukraine had harvested 13% of its corn by week 42, against a five-season average of 33%. Until that crop is in, the buyers France is cutting have fewer alternatives than the price gap suggests, which goes some way to explaining why nearby French corn has kept its premium through its own harvest. Three signals in our data will show how that resolves:

• EU corn imports. They stand at 0.81 Mt after two weeks of the season, against 0.90 a year ago. A pace pulling clearly ahead of last season would mean France's customers have found their replacement supply.
• Ukraine's harvest. A catch-up toward the average curve would bring the cheapest alternative to French corn back onto the market, and the pressure on nearby French corn would ease with it.
• FranceAgriMer's import line. It was left at 0.80 Mt in October, already almost double last season. A rise in November would mean French users themselves are turning to foreign corn, and the shortfall is no longer only France's customers' problem.