01/24/05 E.U. resumes wheat export subsidies

01/24/05 E.U. resumes wheat export subsidies

Farm and Ranch January 24, 2005 An already highly competitive world wheat export market got even more so late last week when the European Union decided to resume its wheat export subsidy program for the first time in a year and a half. The E.U. had been subsidizing some barley exports. Last Thursday the E.U. cereals management committee approved export refunds for two million metric tons of wheat beginning with the February 3rd tender. When he was in the northwest recently, I asked Vince Peterson, U.S. Wheat Associates vice president of overseas operations, if he thought the E.U. would again begin subsidizing exports. He didn't think they would because of the current round of world trade talks and the fact that export subsidies are a central focus of those negotiations. But the E.U. had a big wheat crop this last year and Peterson said there was a lot of domestic pressure to resume subsidies. Peterson: "We are almost at an international price for wheat that is the equivalent of their loan rate. So wheat right now is going into their intervention reserves, kind of like their equivalent of our CCC stocks, and they are starting to accumulate that stuff. And when that starts to happen and take wheat off the market in Europe, it aggravates the trade and there starts to be some pressure by the industry to get Brussels to think about using export subsidies to move that out." Some analysts say that once the E.U. starts offering export subsidies it is difficult to take them away from the exporters and the E.U. is likely to maintain an aggressive export position on into their new crop. The increased competitiveness is seen as increasing the sluggishness of demand for U.S. wheat. I'm Bob Hoff and that's the Northwest Farm and Ranch Report on the Northwest Ag Information Network.
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