By Robert Harris
A SECOND tranche of export subsidies for free-market wheat have been granted by Brussels, adding support to the UK market.
The recent strengthening of the Euro persuaded the European Commission to award export refunds worth 8/t (5/t) on 400,000t yesterday.
This is only the second award since August last year. The first came just before Christmas, when 270,000t of wheat received a 5/t subsidy.
Traders have been waiting for a more aggressive export stance from Brussels all season to make exports out of the EU more competitive on world markets.
Although the UK exports little to third countries, anything that helps reduce EU stocks will help traders here clear the big export surplus overhanging the market.
The move has been given a cautious welcome. “The Euro has recently strengthened 4% (against the US Dollar) so the Commission had to grant the restitution to keep French and German milling wheat competitive with US soft red winters and Argentine wheat on the world markets,” says Glencore Grain in its latest report.
But export refunds are still well behind where they were this time last year and there is a bigger crop to dispose of, it adds.
However, the award more than compensates for the recent strengthening of the Euro, and some believe it could signal a more export-minded position in Brussels.
This, coupled with vessels arriving early this month in the UK for loading and a 5% weakening of the Pound against the Euro, have helped the domestic market move up.
Feed wheat for January is worth 64-67/t depending on location, and 67-68/t for March, says Glencore.