UK wheat exporters might pick up some extra business following last week’s scramble by Black Sea shippers for reduced levy import licenses.
Just under 600,000t of imports for the last quarter of 2005 were available in this latest tranche of the tariff rate quota, a scheme set up to limit the tonnage of cheap third country shipments coming into the EU.
Some shippers applied for huge amounts, fearing they might not have been able to cover existing sales.
Brussels allocated licenses pro-rata – 1t for each 333t applied for.
Some shippers would have to seek grain from other areas to honour contracts, said James Marshall of Centaur Grain.
“We’re not talking huge tonnages, and it won’t necessarily cause the market to roar up, but it should help.”
North Africa was also warming to EU wheat, he added.
“We would hope, given our quality and the efforts of British Cereal Exports, that something will come of that.”
Domestic demand and weaker sterling had largely driven recent price improvements, he added.
The ex-farm November price stood at 63-65/t midweek, up 5-6/t since harvest.
James Maw of Glencore was less optimistic, saying however it was filled, the TRQ bidding process would still allow 600,000t into the EU.
“As usual, we have to build this into our calculation and work out the competition.”
He believed there was little price headroom as long as the EU had big intervention stocks and free market tonnages to sell.
Last week’s decision by Brussels to subsidise the export of 291,000t of wheat at
While prices remained above intervention the commission was unlikely to award bigger export awards, Mr Maw added.
“Brussels is in control of the market and is quite happy with what it is doing.”
New crop continues to improve, with 70/t ex-farm achievable each side of New Year 2006/07, up about 2/t on the week.
Trade reports of reduced plantings in the UK had helped.
“But we are also seeing continued drought in Spain, and in the Black Sea region, where there is already concern over the effects this will have on next year’s crop,” said Mr Marshall.
“I think the outlook is more optimistic.
But, with rising fuel and fertiliser prices, farmers need these better prices just to stand still,” he added.