Brussels’ intervention policy could have less influence on EU grain exports this year, with world stocks forecast at their lowest for 20 years, says Gleadell Agriculture.

World wheat production in 2006 is pegged at 600m tonnes, a drop of 20m tonnes on last year.

So, although the EU faced a bigger harvest than 2005 at 118m tonnes, EU grain could be shipped without the need for Brussels to grant export restitutions, reckoned Gleadell’s David Sheppard.

“While we don’t see prices roaring upwards, there is limited downside to the market at the moment.

And Europe could be a major exporter this year to North Africa and the Middle East, undercutting US prices.”

The domestic EU trading picture looked positive, Mr Sheppard said. Exportable surpluses in Russia and the Ukraine were forecast to be much lower than in recent years.

“After that wheat has gone, the nearest competitive soft red wheat equivalent will be French, and we may see UK wheat shipped to traditionally French destinations like Morocco and the Lebanon but in limited volumes.”

This could all spell more price volatility for UK farmers’ grain, Mr Sheppard said.

“Feed wheat values this season have been pretty flat throughout.

We’ve exported our surplus of 2.3m tonnes quite easily, without ever being very price competitive.”