September 29, 2010

EU releases grain stocks to curb feed costs

Up to three million tonnes of grain are to be released from intervention stocks by the European Commission in an effort to curb rising feed costs to farmers.

The stock will be released on a phased basis from March to August next year, using a tendering system which has yet to be outlined. There are close to six million tonnes of grain held in intervention currently, including 273,000 tonnes of soft wheat and 214,000 tonnes of corn.

The bulk of intervention stocks are held in Germany (1.68 million tonnes), France (929,000 tonnes), Finland (845,000 tonnes) and Hungary (727,000 tonnes).

The European feed industry has been calling for intervention stocks to be released onto the grain market since prices began to rise in July. Some players in the feed industry have also called for EU grain exports to be taxed.

Total grain exports from Europe are currently standing at 7.2 million tonnes, some two million tonnes higher than 2009 when 5.2 million tonnes were exported, and 400,000 tonnes higher than the 2008 export figure.

Net exports are running at 5.3 million tonnes, compared to 2.9 million tonnes in 2009.

European supplies are in demand since grain from the Black Sea region, the biggest discounter in the world market, was halted. However, the Commission's view is that imposing export taxes would further fuel the market and drive grain prices higher in the short term.

The feed industry is also calling for the levy on sorghum imports into the EU to be removed. In the 12 weeks since the European harvest began, imports of sorghum into Europe have reached 66,000 tonnes, compared to just 1,000 tonnes in 2009.

Meanwhile, the International Grains Council has lowered its estimate for world corn production by five million tonnes from last month's estimate to 824 million tonnes. This figure is still 14 million tonnes above 2009-10 production. The fall is due mainly to lower than expected US maize production, down by four million tonnes.