18 April 1997

Fears for export taxes

GRAIN traders are warning of a possible return of export taxes as world prices continue to firm on the back of weather worries.

Earlier this week, Chicago wheat futures rose to a slight premium over London futures (at about £98/t for September) as frosts and floods in the main US growing regions damaged winter crops and delayed spring plantings.

On old crop, too, values have hardened, closing the gap on EU prices in response to weather concerns and fresh export interest.

At last weeks export tender, Brussels issued restitutions for just 170,000t of EU wheat at 6.49ecu/t (£4.82/t), continuing the trend to reduce subsidies. "At this low level it is possible that the next restitution could be at nil subsidy. Export taxes may well be on the cards," says Trevor Harriman of Dalgety.

Brussels certainly has the ability to cap price rises, as it demonstrated last season. But, despite these concerns, new crop grain has continued to edge upwards, spurred on by lack of rain in much of western Europe. This week it touched £100/t ex-farm for November.

"If we take out the currency effect, at this price we are exactly at the same level as we were on the export market a year ago, when new crop ex-farm wheat was worth £126/t," says Richard Whitlock of Banks Agriculture.n