End of grain import levy kick in teeth, says NFU president

19 October 2001

End of grain import levy kick in teeth, says NFU president

By Olivia Cooper

BRUSSELS has decided to lift the import levy on Black Sea, Baltic and Mediterranean grains to lower internal grain prices.

At the weekly management committee meeting on Oct 11, the commission removed the import levy because of fears that internal prices are too high. The levy will be lifted on Nov 9, saving EU importers £6.30/t on east European wheat and barley.

Although UK markets are unlikely to be directly affected, prices on the Continent will be pressured, meaning cheaper imports to the UK, says trader James Maw of Glencore Grain. It will also displace demand from usual export destinations Spain and Italy, making it more difficult to sell the UK wheat surplus.

Wheat markets have fallen about £2/t in the last week, bringing London November wheat futures almost £8/t off the contract high. Spot feed wheat is now worth about £71/t ex-farm.

"This is a kick in the teeth for UK farmers," says NFU president, Ben Gill. "Our market prices are already far lower than those on the Continent due to the strong £ and are now likely to fall even further."

But Steve Harrison of Grainfarmers says: "With domestic prices falling, imported wheat is becoming progressively more expensive." This will prevent the exportable surplus rising further.

DEFRAs first wheat production estimate of almost 12m tonnes leaves about 1m tonnes to export. This is slightly above the NFUs forecast but in line with trade expectations and has had little effect on the market.

Paul Toseland of co-op Viking Cereals disagrees with markets shifting from import parity to export levels this early in the season. "I do not understand why the market is trading a whole 12m tonne crop around a tiny 1m tonne surplus. The market is on its knees and the consumer is simply buying cheaply against shipping trade that is not happening."

Meanwhile, world stocks of wheat and coarse grains were raised in the USDAs latest estimate, but are still the lowest for 13 years. This trend was mirrored by French cereals office ONICs wheat crop estimate of 30.6m tonnes, 13% down on last year.

ONIC chairman, Christian Lapointe, says there is enough to meet domestic and export demand, but he admits French and US wheat is not competitive against Black Sea exports without subsidy. &#42

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