EU extends zero duty on wheat, barley imports

The European Union’s cereals management committee voted Thursday to extend the suspension of the bloc’s import duties on feed wheat and barley until June 30, 2012, the EU’s executive said in a statement.

The EU in June suspended its import duties of 12 euros per tonne for low- and medium-quality wheat and 16 euros a tonne for feed barley until Dec. 31, in response to a spring drought that hit supplies of animal fodder in Europe.

The decision extended the measure until the end of the marketing year.

The move was made to assist the EU livestock sector, which is struggling to secure affordable feed supplies with grain prices above 180 euros per tonne, a Commission spokesman said in the statement.

Under international rules, the EU fixes maximum duties on cereals imports known as bound tariffs. For imports of low- and medium-quality wheat above the tariff-rate quotas (TRQs), these are fixed at 95 euros per tonne and 93 euros for barley.

A portion of the TRQs for wheat are reserved for imports from the U.S. and Canada, while much of the rest usually comes from Russia and Ukraine.

Traders in import-dependent Spain, who use TRQ permits to buy Ukrainian feed wheat, said they had been expecting the EU to extend the duty waiver. They said demand at the auction due in January would depend on the relative price of maize, the ingredient of choice for Spanish animal feed makers.

"If Ukrainian wheat is more expensive than maize, then there won’t be much appetite for wheat and the auction may be null and void," one Spanish dealer said.

"If, on the other hand, Ukrainian maize fob prices are more expensive, and as Ukrainian maize is the benchmark for maize, then there will be appetite for wheat and plenty of bids."

The committee also agreed to merge the first two quarterly tranches of the 2012 TRQ for low- and medium-quality wheat from all countries excluding the U.S and Canada, which means that traders will be free to bid for total imports of 1,189,194 tonnes from Jan. 1.

— Additional reporting for Reuters by Martin Roberts in Madrid; writing by Sybille de La Hamaide

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