July 1, 2005

USDA: EU launches grain export subsidies tender

The EC's Cereals Management Committee has launched tenders for the export of over 5 MMT of grains for the 2005/06 marketing year, as well as tenders to subsidize the shipment of over 0.5 MMT from central Europe to drought-hit Spain. 

There are in addition, plans to release nearly 0.8 MMT of corn from EU intervention stores into EU markets. The export tenders will be eligible for export subsidies, though it is not yet clear whether the EC will need to use export subsidies. 

At the June Agriculture Council, several key grain producing countries in the EU requested that the EC be more active in using the market management tools from the start of the 2005/06 marketing year on July 1. In the last couple of years, the EC has delayed introducing market measures until much later in the fall.

The Spanish and Portuguese are also looking for relief from the drought conditions that have substantially reduced domestic grain availability and increased feed grain import requirements.

In central Europe, there are still problems with storing the large MY 04/05 crop, especially in Hungary. In France, there is keen awareness that without aggressive export subsidies from the start of the MY 05/06 campaign, market opportunities could be lost by failing to act quickly, particularly to the North African market where demand is reported to be strong.

For the full USDA report, click here.