Intervention supports grain

STRONG SALES of wheat and barley into intervention have been recorded in continental Europe since stores opened on Nov 1, helping to underpin prices that have been drifting as the euro has strengthened.

EU Commission figures show that in the first week of November, almost 2m tonnes of cereals were intervened, with the largest offer of 745,000t made in Germany. New members Hungary and the Czech Republic offered over 400,000t each.

The data show 874,000t of the grain destined for public storage is common wheat, with 766,000t of barley also submitted and 163,000t of maize. The buying-in price for November is set at €101.77/t delivered – around £71/t depending on the daily exchange rate.

Home-Grown Cereals Authority senior economist Julian Bell said the opening of intervention would help stabilise continental prices, especially in central and eastern Europe, where coarse grains had been trading at sub-intervention levels.

“There is always uncertainty over whether the grain will reach intervention standards or the logistics can be met. But with grain now flowing, this uncertainty has been removed, which should support prices.”

The fact that significant quantities of grain were now being taken off the market could also prove a boon for UK growers because it could inject some renewed vigour into the export market, said Mr Bell. Further good news is the commission’s granting of export licences for 412,000t of EU barley, the first major allocation of the season. “Prices in the Middle East have risen recently and this has allowed EU shippers to apply for export refunds at below €20/t (£14/t), thought to be the commission”s self-imposed ceiling,” said Glencore Grain.

The shipper/merchant also predicted the start of export subsidies for wheat in the near future to try to keep a lid on intervention sales.

Official data for the second week of intervention were not available as farmers weekly went to press, but anecdotal evidence suggested the swift inflow of grains had continued, especially in eastern Europe.

Renewed enthusiasm for intervention reflects the large grain harvest and currency problems facing the eurozone. At the start of the season just 3.5m tonnes of grain were held in EU stores, compared with 15m tonnes in 1999, and more than 33m tonnes in 1993.