By Philip Clarke

AS first estimates of the size of this years grain harvest start to emerge, traders are wondering where the expected 4.5 million tonne export surplus is going to go.

“Logistically its not a problem. Weve done it in the past, but then we were shipping 1m tonnes a year to Russia,” says Dalgetys Trevor Harriman.

“The problem is we have so many different grades around this year and buyers are not yet clear about what they want.”

So far, 600,000t have been exported. “That is behind the 450,000t/month that will have to go to clear the market. It desperately needs a stimulus,” he says.

The assumed 4.5m-tonne surplus is derived from this weeks NFU estimate of a record 16.5m tonne wheat crop. That compares with 14.97m tonnes last year, reflecting the greatly increased sown area.

Barley is thought to be little changed at 6.68m tonnes.

“This comes at a very difficult time, with incomes in free fall due to desperately low grain prices,” says cereals chairman, Richard Butler.

“This years harvest has been extremely expensive, with high fuel prices and wet weather, increasing drying costs.”

Ex-farm prices were little affected by the NFU estimate, which was much in line with trade expectations.

Feed wheat was trading at about 62/t this week, though with a 1.50/t discount for non-assured grain.

Brussels has continued granting export licences with zero subsidies. This has been made possible by the weakness of the Euro against the US Dollar, says the HGCA.

But the strengthening of the Euro following last weeks intervention by central banks may have changed all that, making EU grain less competitive on world markets.

Despite this, the NFU believes the commission will still be reluctant to bolster exports with refunds.

“Under GATT rules, Brussels can only export 14.4m tonnes with subsidy, much less than in the past,” said economist, Peter King.

And even though French quality is down, overseas customers remain to be convinced that UK wheat is a suitable replacement.

“We may have reasonable specific weights and Hagbergs, but protein is variable and it is essentially still feed wheat,” says David Sheppard of Gleadell Banks.

Generally, the NFU remains concerned about the plight of arable farmers, forecasting that over two thirds will have an income of less than 5000 this year.

And with little sign of an upturn in the market, it is pressing strongly for MAFF to apply for the 91m of agrimonetary compensation available. A request has to be made by November.