Brussels puts brakes on exports of quality wheat

1 September 2000

Brussels puts brakes on exports of quality wheat

By Robert Harris

HOPES that a good quality wheat harvest would boost UK export prospects and lift prices further seem to be fading.

Brussels recent decision to put the brake on EU wheat exports, until a clearer picture of quality in member states emerges, could damage the UKs chances of shifting what looks to be a substantial surplus of 4-4.5m tonnes, says David Balderson of Viking Cereals.

Much of the EU crop, especially in France, has been hit by poor weather. So Brussels granted just 10,000t of free market export licences at a miserly subsidy of just under k1/t last week. The go-slow, which officials have said will last for one to two months, will ensure that quality wheats do not run out.

"It looks as if the CAP is being run solely for the French," says Mr Balderson. "The hope was that we could have filled some of their markets. But Brussels has chucked cold water on that."

Good quality will help the UK secure markets within the EU, notably to Italy, Spain and Portugal, for biscuit-type wheats, which are about £7/t cheaper than the French equivalent, he adds.

But, with more than 70% of UK wheat cut, yields suggest at least 1m tonnes will have to be exported outside the EU this season, says Mr Balderson.

"Brussels message will do nothing to boost confidence among potential customers. The implications for the UK are potentially serious."

Glencore Grains Angela Gibson agrees that the move could hinder UK exports. "We will struggle to sell all our surplus into the EU. Unless subsidies increase or world market prices rise, it will be incredibly difficult to sell the balance."

US soft red winter wheat is worth about $100/t on board ship, $12/t (£8/t) cheaper than the UK. Unless the £ weakens, UK prices would have to fall by that amount to compete without a subsidy.

But that is unlikely, says Ms Gibson. Although Brussels wants to export as much wheat as cheaply as possible, it will have to compete at some stage, so export subsidies may rise. But they may not fully cover the gap between EU and world values. "Eventually, prices may have to adjust downwards unless currency changes."

Delivered feed wheat prices are unchanged to £1/t down from last week, to about £58-£60/t ex-farm. Bread wheat premiums also edged back. "Good quality has already boosted prices by about £5/t. Farmers may want to lock into this rise."

Dalgetys Trevor Harriman believes a bigger threat lies from the loss of some UK feed wheat markets within the EU. Two boatloads earmarked for UK wheat have already been filled with French grain, and more could follow. "We are losing these markets quite quickly. Currency notwithstanding, prices may have to fall to compete." &#42

Hart spring barley comes off at about 6.2t/ha (2.5t/acre) at Brian Brocklebanks Spring Bank Farm, Grange over Sands, Cumbria. Elsewhere, wheats have performed well, but exporting a big surplus could be tricky.

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