Take Action To Curtail Speculation On Cereals Market

The Fish Site
by The Fish Site
6 August 2010, at 1:00am

EU - The quotations for wheat on the EU market have increased by 40 per cent as from thebeginning of July 2010 and there is no indication where and when this will stop.

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 EU, is high enough to meet the global demand while maintaining buffer stocks at a sufficient level.

FEFAC President Patrick Vanden Avenne stated that “Speculation on the cereals market is the key reason for the current price hikes. This affects all partners of the EU 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 EU livestock sector who is still recovering from the previous price shock in the 2007/2008 marketing year.” He therefore urged the EU Commission to immediately release EU intervention stocks of barley to help reduce market price volatility induced by speculation.

Presently, more than 5 mio. t of intervention cereals (mostly barley) are stored at public intervention. Placing such stocks back on the EU 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 EU 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 EU cereals market, Mr Vanden Avenne highlighted that: “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 EU Commission to also reflect on any additional measures that would allow controlling excessive speculation on the futures markets.”