Voluntary Report - public distribution

**Date:** 12/11/2003

**GAIN Report Number:** EZ3017

EZ3017

**Czech Republic**

**Grain and Feed**

**November Grain Situation**

**2003**

**Approved by:**

![](media/image1.wmf)Sarah Hanson

U.S. Embassy

**Prepared by:**

Petra Choteborska

**Report Highlights:**

Wheat production for MY 03/04 amounted to 2.6 million MT, a 32% decrease
from the previous year. Barley production amounted to 2 million MT, a
16% increase. Corn production dropped to 435,000 MT due to low yields
from dry weather. Increased area and high yields resulted in
significantly larger oat production at 240,000 MT. At present, the
Ministry of Agriculture is contemplating the use of export restrictions
for wheat.

Includes PSD Changes: No

Includes Trade Matrix: No

Unscheduled Report

Vienna \[AU1\]

\[EZ\]

**Wheat:**

### *Area, yield, production*

Wheat production in MY 03/04 amounted to a little over 2.6 mil MT, a 32%
decrease from the previous year. Winter wheat dropped by almost 40%
while spring wheat increased by over 100%. Since winter wheat represents
a much higher share of total production, the production drop was a
result of lower area and lower yield -- both caused by a long, cold
winter with insufficient snow coverage.

Total wheat area reached 648,000 ha in MY 03/04, which was only two
thirds compared to MY 01/02. This trend reflects a shift to oilseeds
during the past couple of years and unfavorable weather conditions in
fall 2002 and winter 2003.

Yield in MY 03/04 was 4.05 MT/ha, an 11% drop compared to the previous
year.

### *Consumption*

About one third of total wheat production is used for milling and
further food production. Two thirds is used as feeds.

Lower production of wheat in MY 03/04 will result in increased prices
and a higher demand for wheat seeds. This should result in a return to
previous years' acreage.

### *Trade*

During July-October of MY03/04, the Czech Republic exported over 60,000
MT of wheat with 40,000 MT shipped to Germany, 12,000 MT shipped to
Ukraine, and 5,000 MT shipped to Switzerland and neighboring countries
(all EU-25). The Ministry of Agriculture is contemplating the use of
export restrictions due to the domestic shortage. If this happens
(through use of export licenses), domestic prices will increase.

During July-October of MY03/04, the Czech Republic imported around 700
MT of wheat, predominantly from Slovakia, Germany, Netherlands and
Austria. Even though there is a shortage of wheat, traders do not expect
large imports due to high prices (there is more talk about dipping into
national reserves).

### *Prices*

Currently wheat prices oscillate between \$150-160/MT for milling wheat
and \$130-135 for feed wheat. If export restrictions are not utilized,
spring prices should remain more or less at this level.

## [Barley:]{.underline}

### 

### *Area, yield, production*

Area for spring barley was 31% larger in MY 03/04 compared to the
previous year while winter barley area contracted by 30%. Since spring
barley represents 85% of barley production, total barley production
increased by 16% in MY 03/04 amounting to more than 2 million MT.

Yield of spring barley was 3.93 MT/ha; winter barley was only 3.12 MT/ha
due to the bad winter. Average yield of barley in MY 03/04 was 3.78
MT/ha, which was a 3% increase compared to the year before.

### *Consumption*

About one third of barley production is used for malting, two-thirds for
feeds. This year's barley quality is exceptionally high with samples
containing higher share of protein. There is enough malting barley to
cover domestic need.

### *Trade*

During July-October 2003, about 60,000 MT of barley was exported.
Exports went to the following countries (in 1,000 MT): Austria 14,
Germany 12, Slovakia 10, Poland 8, Hungary 7, Romania 4, Croatia 3 and
smaller amounts to Switzerland and Ukraine.

Over 4,000 MT was imported, three quarters of it from Slovakia, the rest
from Austria and Germany.

### *Prices*

In the past years, there was a big difference between prices of malting
barley and feed barley (high prices for malting barley, low prices for
feed barley). This year it is expected that the difference will be
diminished. While the price of malting barley will more or less remain
at its usual \$140-150 level, price of feed barley will increase to
\$120-130.

## [Corn:]{.underline}

### 

### *Area, yield, production*

Corn production has more than quadrupled in the past seven years. Five
years ago the Czech Republic had to import one third of its domestic
consumption. In MY 02/03, it became a net corn exporter with corn
exports trailing after wheat exports.

In MY 03/04, corn area increased by 10% compared to the previous year
reaching 78,000 ha. It became popular for its high yields and relatively
low maintenance. This year's production 435,000 MT was lower than in MY
02/03 (616,000 MT) as a result of much lower yield 5.6 MT/ha (last year
7.27 MT/ha). Low yield was caused by dry spring with lack of
precipitation.

#### GMO corn

According to Act 153/2000 on GMO in the Czech Republic, Bt corn was
registered for release on the market, which means for import and
commercial growing after a three-year period of field trials. The
registration has not gained legal force yet since Greenpeace (as a civic
association part of the registration process) appealed. See GAINS report
EZ3015 or more information on the biotech regulatory environment.

### *Consumption*

Domestic corn is used mainly for feeds due to its quality specification.
Corn for human consumption is imported. However, a slight increase in
use of domestic corn in food production is expected in MY 03/04.

### *Trade*

The Czech Republic turned into a net exporter of corn in the past few
years. Corn imports are quite low and mainly used for food production
and seeds.

Over 36,000 MT was exported between July and October 2003. Exports in
1,000 MT went to: Poland 14, Germany 13, Netherlands 5, Switzerland 2,
Austria 1, smaller amounts to Hungary and Slovakia.

In the same time period, around 700 MT was imported: 350 MT from
Slovakia, 130 MT from France, 100 MT from the U.S., 50 MT from Poland,
40 MT from Argentina, 40 MT from Hungary, and 23 MT from Germany.

### *Prices*

In MY 02/03, prices dropped significantly, however, due to lack of feed
grain in MY 03/04 prices are expected to rise again to around \$130-140
toward the end of CY 2003.

## [Oats:]{.underline}

### *Area, yield, production*

This was due to a dropping out in other grains such as wheat. The yield
at 3.10 was the best in four years. Both area and yield contributed to
significantly higher oat production exceeding 240,000 MT.

### *Consumption*

High oat production in MY 03/04 will suffice for domestic use in food
production (27,000 MT). The rest will be used for feeds (an increase by
70% compared to the previous year) partially replacing wheat.

### *Trade*

Oats are not imported. Oat exports between July and October 2003
exceeded 4,000 MT. Oats were exported to (in 1,000 MT): Poland 1.4,
Slovenia 1, Switzerland 0.9, Germany 0.6 and Austria 0.2.

### *Prices*

In MY 02/03, prices fluctuated. However, prices are expected to increase
only slightly (to around \$120) in MY03/04 due to the lower grain
production and higher oat production.

## [Rye:]{.underline}

### 

### *Area, yield, production*

Rye production increased in MY 03/04 by 32% to 157,000 MT mainly due to
its long-term insufficiency on the market and its resistance to low
temperatures. However, its unpredictable quality prevents it from larger
growing. Rye area increased only by 19% to 42,000 ha, which shows much
better yield 3.76 than last year. Rye is an exception among grain for
its sustainability during cold winter.

### *Consumption*

Rye is mainly used in the milling industry. In MY03/04, the trend for
lower use of rye in feeds will continue.

### *Trade*

Rye has to be imported to cover domestic consumption. Between July and
October 2003, around 20,000 MT was imported, mainly from Belarus and
Russia. Total MY 03/04 imports should be around 40-50,000 MT.

### *Prices*

## Domestic price of rye will stay at its current level of around \$140-150 this marketing year.

## [Rice:]{.underline}

### *Trade and Consumption*

The Czech Republic does not produce any rice. In MY 02/03, it imported
58,000 MT and exported 8,000 MT. Domestic consumption is constant at
around 50,000 MT. In the first four months of MY03/04, imports exceeded
18,000 MT and exports amounted to 3,000 MT. Imports come mainly from
Asia (India, China, Pakistan, Thailand, Vietnam), but also from southern
Europe (Italy, Spain). Imports from the United States are marginal with
only 1,000 MT being imported last year. For MY 03/04, only 200 MT has
been imported due to higher prices. Following the Czech Republic's
accession to the EU in May 2004, higher quality rice will gradually
replace cheaper low quality rice.

### (Exchange rate: December 2003: 1\$ = 26.7 CZK)