BRUSSELS, BELGIUM — The quotations for wheat on the E.U. market have increased by 40% from the beginning of July and there is no indication where and when this will stop, the European Feed Manufactuers’ Federation (FEFAC) said on Aug. 3.
However, experts all agree that the fundamentals of the market do not support such a dramatic rise: even if the severe setback in the Russian and Ukraine harvest was to be confirmed, the harvest elsewhere in the world, including the E.U., is high enough to meet the global demand while maintaining buffer stocks at a sufficient level, FEFAC said.
FEFAC President Patrick Vanden Avenne said that "Speculation on the cereals market is the key reason for the current price hikes. This affects all partners of the E.U. cereals chain who are raising serious concerns on artificial food price inflation. In addition, FEFAC worries about higher feed prices, which could undermine the competitiveness of the E.U. livestock sector who is still recovering from the previous price shock in the 2007-08 marketing year."
He therefore urged the E.U. Commission to immediately release E.U. intervention stocks of barley to help reduce market price volatility induced by speculation. Presently, more than 5 million tonnes of intervention cereals (mostly barley) are stored at public intervention.
Placing such stocks back on the E.U. market is essential to help combat undue speculation and price volatility. Furthermore, it is an obligation imposed by the Court of Auditors who requested the E.U. Commission to resell intervention stocks in order to benefit from opportunities of high quotations thus saving public money.
Referring to concerns expressed by COPA-COGECA regarding the dysfunctional E.U. cereals market, Vanden Avenne said, "The present cereals market situation proves that futures markets as they function today, are not effective to assist farmers and their customers to manage increasing price volatility for essential commodities. We therefore invite the E.U. Commission to also reflect on any additional measures that would allow controlling excessive speculation on the futures markets."