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There's More Than Enough Grain, Says Brussels

by 5m Editor
6 September 2010, at 8:31am

EU - European Union officials have reiterated there is "more than enough" grain in Europe.

But at this week's agriculture management committee meeting, Spain called for intervention stocks to be released.

And Ireland and several other member countries asked for a decrease on import duties on sorghum, as an alternative source of animal feed in light of the current market volatility.

European Commission officials say recent volatility on global markets highlights the importance of maintaining agricultural production in Europe and the need for future CAP reform to address volatility "as it is becoming more common and frequent".

European Commission department of agriculture officials say the Commission is "conceptually against" the extension of Russia's export ban on grain and flour until next year's crop is harvested, announced by prime minister Vladimir Putin this week.

Russia's move will contribute to driving world market prices upwards, say Brussels officials.

But Prime Minister Putin said, "We can only review lifting the ban on grain exports after the next year's crop is harvested and we have clarity on the balances." He said many Russian producers had started to stockpile grain rather than sell it.

Following the worst drought in 50 years, this year's Russian harvest will be 60-65m tonnes, significantly less than the original forecast of 97m tonnes. Domestic production has to reach between 85-90m tonnes next year to ensure adequate domestic supplies.

World wheat crops are sufficient to meet projected demand but continued uncertainty about the size of the Black Sea harvest will stifle world consumption.

The recent spike in wheat prices has caused projected use of wheat for animal feed to be revised downwards for the European Union and Asia.

But this downturn will be outweighed by increased demand from Russia, which has limited supplies of alternative feed ingredients for its livestock herds.

Overall, steep increases in world wheat export prices have lowered prospects for global trade by 3.4m tonnes.

The sharp fall in Black Sea region exports will see a marked shift in trade flows, with United States exports in particular placed much higher than before, reports the International Grains Council.

European Union cereal production will be 275-277m tonnes this year, according to Brussels.

Once imports and public and private stocks are taken into account, total availability should reach 340m tonnes. This comfortably exceeds the 280m tonnes required for total use.

The European Commission has promised to monitor the market closely, but has no plans to release cereal stocks from public intervention.

Although there have been sharp falls in Black Sea production, it is now clear that United States and European growers have filled the gap.

United States weekly export sales recently hit a 16-year high, according to the London-based inter-governmental organisation, the International Grains Council.

The European Commission department of agriculture says a clearer picture of the overall market situation will emerge once maize is harvested in October.

The forecast for world cereal production in 2010 has been lowered by 41m tonnes to 2,238m tonnes from 2,279m tonnes reported in June.

However, even at this lower level, world cereal output in 2010 will be the third highest on record and above the five-year average.