September 27, 2010

EU feed grain options limited amid levies

Disruptions and price distortions in global grain markets following Russia's grain export ban in August have influenced global grain prices and for some feed grains buyers, alternatives face levies.

"When grain prices started to skyrocket, many grain and feed companies in the EU were looking for alternatives in their feed sector," said Cary Sifferath, US Grains Council senior director Mediterranean and Africa.
 

This was not the first time the EU was asked to suspend the sorghum levy, but the idea this time drew the interest of the United Sorghum Checkoff Program in the US, which thought the levy was not reflecting actual market prices.
 

Bill Kubecka, a sorghum producer from Palacios, Texas, and United Sorghum Checkoff Program board director, said the Sorghum Checkoff sponsored a study with the Council to determine how the EU Levy Board calculated the sorghum import levy and whether it reflected actual US sorghum export values.
 

While the run-up in grain prices resulted in a lower levy – dropping from EUR31.76 per ton on May 1 to EUR7 on September 15 – the way the levy is calculated stretched out the rate of decline.
 

"The corn levy has been at zero euros for some time and while sorghum trades at a premium to corn at times, the differential hasn't matched the real market value," Sifferath said.