June 11, 2004

 

 

Spanish Feed Grain Consumers Buy New-Crop Durum Wheat

 

The Spanish 2004-05 grain harvest is progressing well with feed consumers taking advantage of new-crop durum wheat supplies becoming available, while feed grain prices are down, sources said Thursday.

 

Spanish feed grain prices have come under pressure recently from sellers of optional origin feed grains, with prices falling around EUR3-EUR4 on the week, traders said.

 

Feed wheat, basis cost, insurance and freight at major ports stood at EUR123/ton September-December, with traders currently assessing the impact of more grain supplies in the form of lower quality domestic durum wheat.

 

"Feed consumers are definitely taking advantage of the durum wheat coming out now, but we have to assess if the quality, which is not so good in some areas, will be as low as it appears to be elsewhere. The general feeling is that this is so, but there can be surprises," a trader said, with low-quality durum wheat prices likely to remain competitive against other feed grains.

 

"There is active demand now to cover immediate requirements as the supply situation was so thin until recently," said Pelayo Moreno, director of the Spanish Feed and Grain Trade Association.

 

So far only 7% to 10% of durum wheat area in Andalusia, the area where the Spanish grain harvest usually starts, has been harvested. But combines are expected to move into barley-growing areas such as Extremadura this week, with the Center region expected to start harvesting soon, Moreno said.

 

"New crop is getting whacked from all sides, also from third country cheap imports," another trader said, with some consumers stepping to the sidelines in order to gauge price development.

 

Traders expect the European Union's tariff import quota for low- and medium quality wheat, where the "other origins" contingent totaling 2,371,600 tons comprises mostly Black Sea origin to be exhausted following the rebound of grain production in Ukraine and Russia after the 2003-04 poor harvest.

 

The current quota runs until the end of the calendar year with 2,169,237 tons still available.

 

Spain's 2004-05 grain production forecast of around 22 million tons remains unchanged and is endorsed by all major cooperatives associations and trade bodies, Moreno said, while durum wheat yields had so far been above expectations.

 

Animal feed compounders will continue to buy durum wheat should prices remain competitive, while domestic feed wheat supplies combined with cheap feed wheat from the U.K. and the Black Sea region paint "a favorable future for feed wheat supply," Moreno said.

 

Agronomists reported generally good harvest conditions, and only voiced concerns on the delayed harvest dates of around two weeks due to rain and cool temperatures, which exposes the crops to potentially harmful heatwaves, which have a detrimental effect on grain quality.

 

Plentiful rains have also increased disease pressure, Antonia Caton from the CCAE cooperatives association said.