December 19, 2011

 

 

In advance of an EU auction of permits in the New Year and huge wheat volumes expected in January, Spanish importers have begun to ship Ukrainian feed wheat, port and trade sources said in the major grain-buying country.

 

In January, Brussels is due to call for bids to import some 1.6 million tonnes of low- and medium-quality wheat in the first half of 2012 from origins other than Canada or the US under the so-called tariff-rate quota (TRQ) scheme.

 

Spanish dealers tend to use TRQ permits to import feed wheat from Ukraine to fill a structural cereal shortfall in Spain of at least seven million tonnes a year. A ship carrying 49,500 tonnes of feed wheat from Ukraine docked in Spain's leading grains port, Tarragona, on Friday (Dec 16).

 

"It hasn't been customs cleared. It'll stay in a customs warehouse until it gets clearance in the New Year," a port source said.

 

The source estimated some 300,000 tonnes of feed wheat would land in Tarragona in January, mostly from Ukraine, but also from its Black Sea neighbours Bulgaria and Romania, with maybe an additional small amount from Russia.

 

"In January there'll be a fight to see who can get in first and grab space to land merchandise within cost," he said.

 

Spain's physical wheat market has slowed down in recent weeks as dealers await TRQ imports, for which the EU will extend a current waiver on the usual levy until June 2012.

 

"All eyes are now on feed wheat due to arrive in ports from January onwards (the famous zero-levy quota), and forward covering revolves around it," a report from the Mercolleida grain exchange said.

 

January-March feed wheat has been trading at a discount to prompt delivery in Tarragona for several weeks because it is priced on TRQ imports. Just 8,000 tonnes of wheat has landed in Tarragona this month, from Bulgaria, a favoured origin since it joined the EU in 2007 and imports have been duty free.

 

Meanwhile, animal feed makers have been buying mainly corn and three cargoes of 25,000 tonnes each are due in Tarragona this month, from Ukraine.

 

Ukraine has recently been the origin of choice for corn, although dealers said a recovery in water levels on the Danube could draw imports in the New Year from a bumper crop in Hungary.

 

The roster for Spain's second-most important grain port, Cartagena, showed 25,600 tonnes of Brazilian corn unloading, and 8,000 tonnes of Ukrainian wheat.

 

Estimated corn stocks in Tarragona have dwindled to 20,000 tonnes, although 150,000 tonnes of wheat are also left in port silos while loadings are around 11,000 tonnes a day.

 

"Stocks are tight, but they should last until the New Year," the port source said.