EC WHEAT RELEASE UNLIKELY TO SATISFY U.K. DEMAND
The European Commission's decision to
release an additional 300,000 tonnes of British intervention
feed wheat for the home market will provide only moderate
relief in an increasingly tight market, traders said.
    Some operators had been anticipating a larger tonnage,
pointing out that at this week's U.K. Intervention tender the
market sought to buy 340,000 tonnes but only 126,000 tonnes
were granted.
    The new tranche of intervention grain is unlikely to
satisfy demand, they said, and keen buying competition for
supplies in stores is expected to keep prices firm.
    The release of the feed wheat followed recent strong
representations by the U.K. Grain trade to the Commission.
There has been growing concern that rising internal prices,
triggered by heavy exports, were creating areas of shortage in
interior markets.
    The latest EC authorisation will add 70,000 tonnes at the
April 14 tender and a further 30,000 tonnes later in the month.
The remaining 200,000 tonnes will be made available in May and
June.
    News of the release produced an early downward reaction in
local physical markets, but by midday some sections had halved
early two stg losses while others were unchanged.
    Ministry of Agriculture figures for March indicate 1.85 mln
tonnes of wheat and 1.74 mln tonnes of barley remain in the
free market. However, some traders believe these figures are
overstated and, while some may still be held on the farm, the
bulk of wheat is already sold. Some of the grain is also off
the market in futures stores.
    A total of 2.10 mln tonnes of intervention wheat has been
sold for export or to the home market since the season started
July 1, leaving an unsold balance in intervention of about 1.59
mln tonnes.
    Intervention barley sales have reached just over 1.0 mln
tonnes, leaving about 753,000 tonnes, traders said.
    This season's U.K. Export performance has surpassed all
early expectations and has created the present nervous
situation in domestic markets where the fear now is free market
supplies may not last out until new crop becomes available in
August.
    The market is sticking to its recent prediction of total
barley and wheat exports of around 10.5 mln tonnes, a new
record and nearly double the previous record of 5.9 mln tonnes
achieved in the 1984/85 season.
    Traders expect U.K. Wheat exports to reach 6.0 mln and
barley around 4.50 mln tonnes.
    The Soviet Union has booked a record total of 2.5 mln
tonnes of British wheat and barley this season, but only 1.28
mln had surfaced in Customs export figures by March 25, traders
said.
    Other EC countries have bought large amounts of British
grain and for the July 1/March 25 period had taken 2.59 mln
tonnes of wheat and 2.06 mln tonnes of barley. This compares
with 1.28 mln and 868,700 tonnes last season.
    The market is expecting prices, particularly wheat, to stay
buoyant for the remaining few months of the season. If supplies
become more difficult and prices strengthen further, feed
compounders may increase cereal substitute usage, traders said.
 Reuter
