November 27, 2007

EU move won't increase Canada wheat

A move by the European Union to suspend import tariffs on most cereals for the rest of the 2007-08 marketing year won't prompt increased Canadian wheat and barley shipments, a spokeswoman for the Canadian Wheat Board said.

"What we are selling to Europe in terms of wheat is high-quality, high- protein wheats, and that goes into the EU region tariff-free anyway," said Maureen Fitzhenry, director of CWB Media Relations.

The change is for the lower-quality, lower-protein wheats, of which Canada doesn't have a lot available this year, she said.

"In any case, even when Canada does have a quantity of these supplies available for export, the EU is not a target destination," Fitzhenry said. "As a result, from a wheat perspective, the EU move will be net neutral."

The move is also seen as insignificant for barley, Fitzhenry said, noting the CWB does not really sell barley into the EU

"The EU change is not something that will create opportunities that did not exist before for the CWB," she said.

The EU's 2007 cereals harvest is projected to fall below last year's level by around 3.5 percent due to dry and unusually hot April weather followed by a poor summer in Western Europe and hot drought conditions in the southeast.

EU cereals output was seen declining at a time when EU stocks are already low, the EU said in a prepared statement. As a result, the EU will need more imports in 2007-08 than in 2006-07.

The EU tariff reduction, however, won't apply to oats as the need to balance the EU market continues.