News
18.09.2009
EU barley set for intervention, wheat close
Intervention buying will be needed this season to absorb the European Union's hefty surplus of barley, which has already fallen below the bloc's guaranteed minimum price, French analyst Strategie Grains said on Thursday. The analyst raised its estimate for this summer's EU barley crop by 800,000 tonnes to 61.5 million tonnes, contributing to a 1 million tonne increase in its forecast for available supplies this season.
"This surplus is creating downward pressure on EU feed barley prices, which are already below the intervention level," Strategie Grains said in its monthly crop report. "Offers to intervention will therefore be required in order to tighten the situation on the open market in 2009/10."
Under the intervention system, farmers can offer grain to the EU stores at a guaranteed price. For November, when the intervention period opens in most member states, this amounts to around 102 euros a tonne, including carrying charges. Following a mid-term reform of the EU's farm policy, 2009/10 will be the last season in which unlimited offers of barley and wheat can be made to intervention stores. From next season, barley intervention will be suspended and wheat intervention only guaranteed up to 3 million tonnes. Maize intervention has already been suspended as of 2009/10.
The barley surplus partly reflects higher availability of barley suitable for malting after this year's EU crop showed excellent quality, Strategie Grains said. "The fact that the malting barley premiums (spread between malting and feed barley prices) are virtually zero reflects this situation."
The malting barley surplus could be reduced if exports to China are bigger than expected, but this would still leave large stocks at the end of the season, it said. Wheat prices could also reach intervention levels after sliding this summer on the prospect of mounting global stocks and with export competition from Black Sea grain set to increase in the short term, the analyst said. Prices could even fall below the intervention floor if wheat cannot be offered into public stores for quality reasons or because of a lack of space, it said.
However, like for barley, the intervention minimum price should limit the downside for EU wheat and could also act as a support for world wheat prices, the analyst said. "The floor price created by EU intervention may also act as a lower limit for other origins on the world market (if the EU keeps the wheat in storage rather than exporting it)."
Reuters
