22 September 1995

Further restrictions on grain exports expected

By Philip Clarke

FURTHER restrictions on exports of grain outside the EU are anticipated as Brussels continues to try to keep a lid on prices.

"The commission is under tremendous pressure from pig and poultry producers regarding the high prices for cereals and, with hardly any wheat in intervention, third country exports are one of the very few tools they have to try to control prices," said Dalgety general manager Don Patterson.

But these restrictions were hitting the French much harder than the UK, as they are more dependent on sales outside the EU, he added.

Presenting Dalgetys annual harvest review, Mr Patterson said the UK would have little difficulty disposing of its 2.94m tonne wheat surplus.

"Spain and Italy have already received cargoes from the UK and, as expected, are pleased with the quality."

He estimated that Spain and Italy would take 1.5m tonnes between them, with another 200,000t going to Portugal. "The UK is certainly getting a name of being able to produce wheat quality that is acceptable to our European colleagues and this is great news for farmers," said Mr Patterson.

The export figure of 2.94m tonnes was explained by arable crop marketing manager Andrew Barnard. Starting from a total wheat crop of 14.17m tonnes (based on an average yield of 7.64t/ha), he estimated that 5m tonnes would be used for milling.

"We expect millers to take full advantage of the high proteins and Hagbergs and low moistures available, and are raising our forecast of UK wheat in the national grist to 88% (compared with 83% last year)," said Mr Barnard. There has, however, been a problem with high screenings and most millers have relaxed their terms from 3% to 4% before penalties apply.

For compounding, Dalgety is raising its forecast demand to 5.3m tonnes as a result of increased broiler feed potential and poor forage availability.

"Another noticeable feature of our demand estimate is the increasing use of wheat for industrial purposes – mainly distilling and starch manufacture. We see this rising to 1m tonnes from 750,000t two years ago," he added. After allowing for 580,000t of seed and waste, the export surplus was left at 2.94m tonnes (see chart).

But Mr Barnard was concerned about the continuing effect of arable area payments in interrupting the flow of grain off farms. He estimated that marketings would be 10-15% down in December and January due to this.

He acknowledged that the incentive to sell was not there, with farmers getting used to an end of season price rally. But, with customers already lined up to import wheat, he believed markets could be lost to the Danish and French if UK farmers refused to release anything.