Required Report - public distribution

**Date:** 12/8/2004

**GAIN Report Number:** E34100

E34100

**EU-25**

**Grain and Feed**

**Semi-Annual**

**2004**

**Approved by:**

![](media/image1.wmf)Norval Francis

U.S. Mission to the EU

**Prepared by:**

Peter Talks

**Report Highlights:**

With a banner grain harvest of 285 MMT across the EU-25, domestic grain
supplies are considerably higher than domestic feed and food
requirements. This has lead to depressed prices on the EU market.
However, with the Euro rising against the US Dollar, the export outlook
for EU grains is not spectacular, particularly with the European
Commission having only granted export subsidies for barley so far during
MY 04/05. While EU imports for all grains are expected to be limited,
there remains a good market for traditional high protein wheat imports
from North America.

Includes PSD Changes: No

Includes Trade Matrix: No

Unscheduled Report

Brussels USEU \[BE2\]

\[E3\]

Table of Contents

[Introduction 2](#introduction)

[Executive Summary 3](#executive-summary)

[Wheat 4](#wheat)

[Barley 9](#barley)

[Corn 12](#corn)

[Rye 15](#rye)

[Sorghum 17](#sorghum)

[Oats 18](#oats)

[Mixed Grain 19](#mixed-grain)

[Related USEU and European Reports
20](#related-useu-and-european-reports)

# Introduction

This report presents the grains outlook for Marketing Year (MY) 2004/05
for the European Union. On May 1, 2004, ten New Member States (NMS)
joined the EU, namely, the Czech Republic, Cyprus, Estonia, Hungary,
Latvia, Lithuania, Malta, Poland, Slovakia and Slovenia. This report
gives Production Supply and Demand (PSD) estimates for the EU-25.

Please note that all data provided in this report is based on the
opinion of FAS analysts based in the EU and is not official FAS data.

This is a consolidated EU-25 report prepared with the invaluable input
from the following FAS

analysts:

Bob Flach from FAS The Hague

Xavier Audran from FAS Paris

Steve Knight from FAS London

Diego Pazos from FAS Madrid

Sandro Perini from FAS Rome

Dietmar Achilles from FAS Bonn

Wlodek Makowski from FAS Warsaw

Note: Data in this report is not official USDA data.

HA = Hectares

MT = Metric ton

MY = Marketing Year. The EU local marketing years used in this report
are July/June, except for Corn which follows October/September.

# Executive Summary

With a banner grain harvest of 285 MMT across the EU-25, domestic grain
supplies are considerably higher than domestic feed and food
requirements. This has lead to depressed prices on the EU market.
However, with the Euro rising against the US Dollar, the export outlook
for EU grains is not spectacular, particularly with the European
Commission having only granted export subsidies for barley so far during
MY 04/05.

Wheat production of 136.6 MMT will see higher feed use of wheat, rising
7 MMT to 54.7 MMT. With exports set at 15.7 MMT, based on a weak dollar
and no or only limited use of export subsidies by the European
Commission, wheat stocks are forecast to double during MY 04/05 from
11.1 MMT to 22.2 MMT, with significant quantities ending up in EU
intervention stores. Should the European Commission decide to
aggressively use export subsidies for wheat, or if the Euro reverses the
trend of appreciating against the US Dollar, coupled with solid demand
from key North African and Middle Eastern markets then the export figure
would rise at the expense of stocks.

Despite a barley crop rising by 8 MMT to 62.1 MMT in MY 04/05, barley
feed use is expected to decline by 2.5 MMT to 37.7 MMT due to the
widespread availability of cheaply priced feed wheat. If only a very
mediocre export figure of 2.4 MMT is realised, then barley stocks will
also rise significantly from 5.3 MMT to 12.2 MMT.

Corn production also rebounded by almost 12 MMT to 52.2 MMT in MY 04/05,
leading to a decline in EU corn imports to just 2.6 MMT and nearly 5 MMT
additional corn being used as feed to give total feed use at 40.4 MMT.

Rye production has stabilised at a fraction under 10 MMT. The removal of
rye from the list of grains that can be offered to EU intervention had
already reduced rye production in Germany. However, Germany and Poland,
the two key rye producing areas in the EU, farmers have only limited
options to move away from planting rye.

Mixed grain output, including triticale, rose from 11.7 MMT in MY 03/04
to 15.7 MMT in MY 04/05. Used almost exclusively as feed, mixed grain
provides an important component of EU feed grain demand.

# Wheat

**PSD Table EU-25, Wheat**

+---------------------+-------+-------+-------+-------+-------+-------+
| **Country**         | **EU  |       |       |       |       |       |
|                     | -25** |       |       |       |       |       |
+---------------------+-------+-------+-------+-------+-------+-------+
| **Commodity**       | ###   |       |       |       | (1000 |       |
|                     | ####  |       |       |       | HA)   |       |
|                     | Wheat |       |       |       | (1000 |       |
|                     |       |       |       |       | MT)   |       |
+---------------------+-------+-------+-------+-------+-------+-------+
|                     | 2002  | *     | 2003  | **    | 2004  | **    |
|                     |       | *Revi |       | Estim |       | Forec |
|                     |       | sed** |       | ate** |       | ast** |
+---------------------+-------+-------+-------+-------+-------+-------+
|                     | USDA  | *     | USDA  | *     | USDA  | *     |
|                     | Off   | *Post | Off   | *Post | Off   | *Post |
|                     | icial | Est   | icial | Est   | icial | Est   |
|                     | \[    | imate | \[    | imate | \[    | imate |
|                     | Old\] | \[Ne  | Old\] | \[Ne  | Old\] | \[Ne  |
|                     |       | w\]** |       | w\]** |       | w\]** |
+---------------------+-------+-------+-------+-------+-------+-------+
| **Market Year       | *     |       | *     |       | *     |       |
| Begin**             | *07/2 |       | *07/2 |       | *07/2 |       |
|                     | 002** |       | 003** |       | 004** |       |
+---------------------+-------+-------+-------+-------+-------+-------+
| Area Harvested      | 23080 | 23076 | 21898 | 21922 | 23246 | 23259 |
+---------------------+-------+-------+-------+-------+-------+-------+
| Beginning Stocks    | 15373 | 15562 | 16116 | 16262 | 11718 | 11085 |
+---------------------+-------+-------+-------+-------+-------+-------+
| Production          | 1     | 1     | 1     | 1     | 1     | 1     |
|                     | 24270 | 24292 | 06715 | 06962 | 27088 | 36606 |
+---------------------+-------+-------+-------+-------+-------+-------+
| TOTAL Mkt. Yr.      | 10719 | 1     | 6899  | 6275  | 4640  | 5192  |
| Imports             |       | 2,950 |       |       |       |       |
+---------------------+-------+-------+-------+-------+-------+-------+
| Jul-Jun Imports     | 10719 | 1     | 6899  | 6275  | 4640  | 5192  |
|                     |       | 2,950 |       |       |       |       |
+---------------------+-------+-------+-------+-------+-------+-------+
| Jul-Jun Import U.S. | 1330  | 1,335 | 2567  | 2256  | 1316  | 1736  |
+---------------------+-------+-------+-------+-------+-------+-------+
| TOTAL SUPPLY        | 1     | 1     | 1     | 1     | 1     | 1     |
|                     | 50362 | 52804 | 29730 | 29499 | 43446 | 52883 |
+---------------------+-------+-------+-------+-------+-------+-------+
| TOTAL Mkt. Yr.      | 18658 | 19965 | 9069  | 11030 | 14175 | 15686 |
| Exports             |       |       |       |       |       |       |
+---------------------+-------+-------+-------+-------+-------+-------+
| Jul-Jun Exports     | 18658 | 1     | 9069  | 11030 | 14175 | 15686 |
|                     |       | 9,965 |       |       |       |       |
+---------------------+-------+-------+-------+-------+-------+-------+
| Feed Dom.           | 54999 | 55843 | 49323 | 47520 | 52122 | 54717 |
| Consumption         |       |       |       |       |       |       |
+---------------------+-------+-------+-------+-------+-------+-------+
| TOTAL Dom.          | 1     | 1     | 1     | 1     | 1     | 1     |
| Consumption         | 15588 | 16577 | 08943 | 07384 | 12545 | 14968 |
+---------------------+-------+-------+-------+-------+-------+-------+
| Ending Stocks       | 16116 | 16262 | 11718 | 11085 | 16726 | 22229 |
+---------------------+-------+-------+-------+-------+-------+-------+
| TOTAL DISTRIBUTION  | 1     | 1     | 1     | 1     | 1     | 1     |
|                     | 50362 | 52804 | 29730 | 29499 | 43446 | 52883 |
+---------------------+-------+-------+-------+-------+-------+-------+

Note: All values in 1000 MT, except Area Harvested row in 1000 HA.

Source: FAS EU Posts, not official FAS data.

**Production**

Favorable conditions in much of the EU, as well as a reduced set-aside
requirement during MY 04/05 helped to give a total EU-25 wheat
production of 136.6 MMT, almost 30 MMT higher than the previous year's
drought reduced harvest. There were record yields in Germany, Belgium
and the Netherlands, as well as good yields in Poland and France.

In the UK, a large harvest of 15.7 MMT was recorded, though while the
first half of the crop, generally in the south of England was of average
quality, the second half of the harvest, particularly in the north was
of poor quality, creating a large surplus of feed wheat, especially as
most of it is not of interventionable quality.

The French durum crop was both large and of good quality. The soft wheat
crop is reported to be of good, if unexceptional quality (certainly
compared to last year). However, around one third of the soft wheat
crop, mostly in northern France was affected by the late summer rains,
reducing its quality. It is noted that there is increased interest in
planting higher quality wheat varieties in France, so over time quality
is expected to rise.

A very preliminary outlook for the 2005 wheat crop is good for France,
as well as very good in Germany. In Germany wheat area for 2005 is
forecast to increase by 3% to 3.2 m ha. at the expense of rye, triticale
and barley. In addition, farmers have been planting an increasing share
of high quality wheat varieties, reducing the portion of feed wheat and
regular baking varieties.

Italy had a record durum wheat crop in of 5.7 MMT, due to very good
climatic conditions, however, the protein content is reported as being
not so good. Some durum wheat may even end up as animal feed.

The 2003 CAP Reform enters into force on January 1, 2005 in Italy[^1].
The Italian government has opted to fully decouple income support
payments for arable crops. This could lead to reduced plantings for
durum wheat -- the most extreme estimates have been of up to 25% to 30%.
However, the production reduction is expected to be much less -- in the
order of 5% to 10% as most of the reduction is likely to occur in
southern Italy where yields are very low. Just ass production is set to
decline in Italy, experiments to grow durum wheat in Poland on 50
hectares are reported to have shown some success thus year.

In Germany, how the government frames the cross-compliance
regulations[^2] will determine whether low yield arable areas will be
switched to voluntary set-aside.

Wheat Production

  -------------------------------------------- --------------------------
  1000 MT                                      **04/05**

  France                                       39502

  Germany                                      25347

  United Kingdom                               15706

  Italy                                        8772

  Spain                                        7250

  Netherlands                                  1249

  Austria                                      1633

  Belgium-Luxembourg                           1998

  Denmark                                      4900

  Finland                                      800

  Greece                                       1700

  Ireland                                      1043

  Portugal                                     247

  Sweden                                       2300

  **EU15 Total**                               **112,447**

  Cyprus                                       10

  Czech R.                                     5077

  Estonia                                      150

  Hungary                                      5800

  Latvia                                       500

  Lithuania                                    1150

  Malta                                        10

  Poland                                       9520

  Slovakia                                     1800

  Slovenia                                     142

  **NMS 10 total**                             **24,159**

  **EU-25 Total**                              **136,606**
  -------------------------------------------- --------------------------

Source: FAS EU Posts.

**Consumption**

With abundant domestic availability of low priced wheat, feed use of
wheat is expected to return towards levels seen in 2002/03, when high
levels of imports of feed wheat from Russia and the Ukraine as well as a
good EU harvest led to a domestic supply of wheat similar to MY 04/05.
Feed consumption of wheat is forecast at 54.7 MT for the EU-25 in MY
04/05, compared to 47.5 MMT in MY 03/04 and 55.8 MMT in MY 02/03.

The relatively low price of wheat is driving increased feed consumption
of wheat. In the Benelux, pig and poultry feed rations are now reported
to be using 60 percent grain. The wheat use is 30 percent in pig feed
and 25 percent in poultry feed, which is above the average of about 20
percent but is still below the technical limit of about 35 percent for
both pig and poultry feeds. With some protein already present in wheat,
and rapeseed available in Europe, some soybean meal as well as non grain
feed ingredients (NGFI) such as tapioca, are being replaced by grain.

In MY 04/05, German compound feed purchases from the livestock sector is
expected to decline by up to 1.0 MMT due to higher levels of on farm
grain feeding, particularly as the last 20% of the German wheat harvest
was bought in late due to rain damage. This wheat is often not of
interventionable quality and so is likely to be used on farm (or at
nearby farms), leading to an additional 1.5 MMT of wheat feed use in
Germany in MY 04/05.

Feed Seed and industrial (FSI) consumption of wheat is reported to be
stable, with starch production static to possibly rising by 3% across
the EU this year. A small increase in German starch production is also
expected, though it is not yet clear whether wheat or rye will be the
input.

There is considerable interest in ethanol production (typically using
grains -- wheat, barley and rye - as the feedstock) in the EU due to the
EU's policy of promoting the use of renewable energy sources. (See GAIN
Report GM4048, [Biofuels in
Germany](http://www.fas.usda.gov/gainfiles/200411/146118126.pdf) --
Prospects and Limitations, or
[E23040](http://www.fas.usda.gov/gainfiles/200303/145884924.pdf) for
more details on the EU's Biofuels Promotion Regulation). As part of
these measures, Member States can lower fuel excise duties to create
incentives for, amongst others, biodiesel (typically from rapeseed oil)
and bioethanol production. In France, there are plans for four new
bio-ethanol plants to be built in the next three to four years. A new
bioethanol plant has opened in Germany, with a further two due to open
in the spring of 2005. These plants will require 1.5 to 1.8 MMT of grain
feedstock likely to be wheat, barley and rye. For MY 04/05, 600,000 MT
has been added to German FSI consumption. A fourth plant may also
eventually be built.

The ethanol plants will also produce distillers grain as a by-product,
which may lead to either a reduction in import demand for distillers
grains or replace other feed types on the domestic market. It is also
possible that the ethanol plants could eventually add drying facilities,
which could add markets further a field for the dried distillers grain.

However, it is not known for how many years governments will continue to
offer tax incentives for bio-fuel production, particularly if
significant imports of ethanol etc. develop. The EU is currently
negotiating a free trade agreement with Mercosur (Brazil, Argentina,
Uruguay and Paraguay). The Commission has already offered a TRQ for 1
million litres of ethanol (from sugar cane). The negotiations are on
going and should agreement be reached the agriculture section of the
deal is likely to be phased in over several years.

There is currently one ethanol plant in Poland, using rye and potatoes
as feedstock. There is interest in further expansion, probably of
rapeseed biodiesel, however, the government has yet to complete its
biofuels legislation.

**Trade**

The substantial crop in Germany has reduced import requirements,
reducing intra-EU trade, though UK surpluses of non-interventionable
grain may be shipped for feed use to northern Germany in the new year
once feed millers have used up post harvest stocks.

Italian durum wheat imports will likely decline, though not by as much
as a record durum crop would suggest due to quality issues. Import
requirements are expected to be around 1.2 MMT, as some high protein
content hard wheat is still required, of which 800,000 is expected to be
sourced from Canada. Italian pasta exports appear to be recovering after
last years decline, as well as exports to the New Member States (NMS)
taking off, with several pasta plants now specializing in this market.

Polish import requirements are set at around 200,000 MT for MY 04/05.
Typically, around 100,000 to 120,000 MT high quality wheat were
imported, though increasingly, gluten is added to flour, reducing durum
import requirements to perhaps 40,000 to 60,000 MT.

Extra-EU wheat exports are expected to rise, with current USEU estimates
at 15.68 MMT for MY 04/05. This figure is based on continued strength of
the Euro against the US Dollar, as well as only limited export refunds
being made available by the European Commission. The Commission's export
subsidy policy for the remainder of MY 04/05 remains a wild card. The
key period for EU exports could be the first couple of months of 2005.
Without assistance from export subsidies during this period, given the
strong Euro and EU intervention prices which act as a floor to EU
prices, then wheat and wheat product exports are unlikely to rise to
anywhere near the levels seen in MY 02/03 of 20 MMT.

Flour exports are expected to recover after a difficult year last year
due to the high price of European wheat and the absence of export
subsidies. So far in MY 04/05, flour exports are reported to be
progressing at an acceptable pace, with some of the African markets lost
last year being recaptured. However, the key period for the millers will
be the first couple of months of 2005, with no export subsidy assistance
currently available, they may face difficult competition in some third
country markets. Once South American harvests come on line, particularly
from Argentina, they are likely to see the pace of exports declining.

France saw a large crop of durum wheat of good quality and the trade is
reported to be hoping for export sales to North Africa to approach 5.5
MMT. In the summer, French shipments started brightly to Egypt, but the
rise of the Euro against the US Dollar has shifted competitiveness
towards Argentine wheat. The Euro exchange rate is viewed as key by some
French traders, as well as a source of concern. Without export
subsidies, exports may be increasingly difficult to realise through the
balance of the 04/05 Marketing Year. Should exports decline from the
expected pace, then stocks would be increased correspondingly.

In October, a deal to ship 700,000 MT of wheat to China was announced,
with hopes in France that another 700,000 to 1 MMT further orders maybe
obtained this campaign.

The UK has up to 3 MMT of feed wheat available for export, with possible
markets in France, Spain, Germany and perhaps a little to North Africa.

With a substantial increase in the EU's intervention stocks expected
during MY 04/05, the Commission's intervention policy could make its way
onto the political agenda at some point in the future. While, the medium
term future of intervention (and hence a guaranteed minimum price) is
not in doubt, small changes to either intervention criteria or
intervention prices could help to reduce its importance[^3].

**Stocks**

With wheat exports pegged at 15.68 MMT, a substantial surplus is likely
to end as stocks, with EU-25 wide wheat stocks doubling from 11 MMT to
22 MMT. EU intervention stocks in particular will be rebuilt. During
November, the first month that EU intervention stores have been open for
the 04/05 season, 2.227 MMT wheat has already been offered to
intervention.

The Polish intervention agency expects around 800,000 MT of grains to be
offered into intervention in MY 0/05, of which 90% would be wheat. With
the grain market currently quiet in Poland, and only around 50% of this
volume currently contracted, it is currently difficult to estimate final
intervention stocks. A further 1 to 1.5 MMT of wheat is expected to be
offered to intervention in Germany.

# Barley

**PSD Table EU-25, Wheat**

+---------------------+-------+-------+-------+-------+-------+-------+
| **Country**         | **EU  |       |       |       |       |       |
|                     | -25** |       |       |       |       |       |
+---------------------+-------+-------+-------+-------+-------+-------+
| **Commodity**       | ####  |       |       |       | (1000 |       |
|                     | ### B |       |       |       | HA)   |       |
|                     | arley |       |       |       | (1000 |       |
|                     |       |       |       |       | MT)   |       |
+---------------------+-------+-------+-------+-------+-------+-------+
|                     | 2002  | *     | 2003  | **    | 2004  | **    |
|                     |       | *Revi |       | Estim |       | Forec |
|                     |       | sed** |       | ate** |       | ast** |
+---------------------+-------+-------+-------+-------+-------+-------+
|                     | USDA  | *     | USDA  | *     | USDA  | *     |
|                     | Off   | *Post | Off   | *Post | Off   | *Post |
|                     | icial | Est   | icial | Est   | icial | Est   |
|                     | \[    | imate | \[    | imate | \[    | imate |
|                     | Old\] | \[Ne  | Old\] | \[Ne  | Old\] | \[Ne  |
|                     |       | w\]** |       | w\]** |       | w\]** |
+---------------------+-------+-------+-------+-------+-------+-------+
| **Market Year       | *     |       | *     |       | *     |       |
| Begin**             | *07/2 |       | *07/2 |       | *07/2 |       |
|                     | 002** |       | 003** |       | 004** |       |
+---------------------+-------+-------+-------+-------+-------+-------+
| Area Harvested      | 13416 | 13418 | 13425 | 13438 | 13668 | 13087 |
+---------------------+-------+-------+-------+-------+-------+-------+
| Beginning Stocks    | 9121  | 9170  | 7362  | 7606  | 5474  | 5252  |
+---------------------+-------+-------+-------+-------+-------+-------+
| Production          | 56391 | 56408 | 54803 | 54718 | 60571 | 62066 |
+---------------------+-------+-------+-------+-------+-------+-------+
| TOTAL Mkt. Yr.      | 1329  | 1302  | 815   | 788   | 351   | 345   |
| Imports             |       |       |       |       |       |       |
+---------------------+-------+-------+-------+-------+-------+-------+
| Oct-Sep Imports     | 1329  | 1329  | 815   | 815   | 351   | 351   |
+---------------------+-------+-------+-------+-------+-------+-------+
| Oct-Sep Import U.S. | 14    | 14    | 20    | 20    | 50    | 50    |
+---------------------+-------+-------+-------+-------+-------+-------+
| TOTAL SUPPLY        | 66841 | 66880 | 62980 | 63112 | 66396 | 67663 |
+---------------------+-------+-------+-------+-------+-------+-------+
| TOTAL Mkt. Yr.      | 4926  | 4938  | 2894  | 2929  | 3817  | 2421  |
| Exports             |       |       |       |       |       |       |
+---------------------+-------+-------+-------+-------+-------+-------+
| Oct-Sep Exports     | 5108  | 5108  | 2894  | 2894  | 3817  | 2421  |
+---------------------+-------+-------+-------+-------+-------+-------+
| Feed Dom.           | 38134 | 38123 | 39126 | 40090 | 40117 | 37684 |
| Consumption         |       |       |       |       |       |       |
+---------------------+-------+-------+-------+-------+-------+-------+
| TOTAL Dom.          | 54553 | 54336 | 54612 | 54931 | 55219 | 53081 |
| Consumption         |       |       |       |       |       |       |
+---------------------+-------+-------+-------+-------+-------+-------+
| Ending Stocks       | 7362  | 7606  | 5474  | 5252  | 7360  | 12161 |
+---------------------+-------+-------+-------+-------+-------+-------+
| TOTAL DISTRIBUTION  | 66841 | 66880 | 62980 | 63112 | 66396 | 67663 |
+---------------------+-------+-------+-------+-------+-------+-------+

Note: All values in 1000 MT, except Area Harvested row in 1000 HA.

Source: FAS EU Posts, not official FAS data.

**Production**

In France, a record crop of 11.2 MMT was also combined with generally
good to high quality. Around 30% of French output is malting barley,
compared to typically 15% to 20%. Barley output rose by 1 MMT in Poland,
seeing production return to more usual levels following last year's
weather affected crop.

Across northern Europe, the 2005 barley crop looks to be in decent
condition, with no major changes to crop areas expected. French barley
area is expected to decline marginally.

**Barley Production**

  -------------------------------------------- --------------------------
  1000 MT                                      **04/05**

  France                                       11200

  Germany                                      12967

  United Kingdom                               5860

  Italy                                        1139

  Spain                                        10800

  Netherlands                                  297

  Austria                                      880

  Belgium-Luxembourg                           355

  Denmark                                      3794

  Finland                                      1800

  Greece                                       300

  Ireland                                      1184

  Portugal                                     14

  Sweden                                       1850

  **EU15 Total**                               **52,440**

  Cyprus                                       90

  Czech R.                                     2367

  Estonia                                      280

  Hungary                                      1400

  Latvia                                       269

  Lithuania                                    670

  Malta                                        3

  Poland                                       3510

  Slovakia                                     984

  Slovenia                                     53

  **NMS 10 total**                             **9,626**

  **EU-25 Total**                              **62,066**
  -------------------------------------------- --------------------------

Source: FAS EU Posts.

**Consumption**

In the Benelux, as well as the UK, feed use of barley has declined due
to competition from feed wheat. In Germany, feed use of barley is
expected to decline by around 2 MMT during MY 04/05, due to competition
from feed wheat, rye and triticale. In addition, the good quality of
feed barley ensures that most of the crop meets intervention criteria.
Also, a bigger and better forage output competes favourably with grain
for feed use.

In France too, barley is not competitive as feed, though due to the high
levels of on farm feed use of barley in France, feed use is likely to
decline by just 0.5 MMT to 3.5 MMT during MY 04/05.

Over the medium term, EU-15 malting capacity is expected by some
commentators to rise by perhaps 400,000 MT to 8 MMT, with increased
exports of malt. In the Netherlands, a new plant with capacity for
around 165,000 MT is due to become fully operational by 2005/06. Other
operators have talked of a gradual shift in malting capacity over the
coming years from Western Europe towards Eastern Europe, particularly
with a continued malt deficit in eastern Europe as well as strong demand
in Russia. Two UK malting plants may suspend operations later this year.
It should be noted that EU wide, beer consumption has been on a long
term declining trend.

**Trade**

EU-25 export estimates of 2.337 MMT are based on a continued cautious
export subsidy program from the European Commission. Should strong
international demand for EU barley materialise, or with higher levels of
export subsidies, EU exports during MY 04/05 could rise towards 3 MMT,
given the availability of EU barley, currently slated to go into
intervention stocks in this forecast.

Both German barley imports and exports are expected to decline. The
former due to the availability of plenty of domestic feed grains and
reasonable quality malting barley, the latter due to other countries
being more competitive in key markets. German barley exports are thus
revised down from around 2.0 MMT to 1.3 MMT for MY 04/05. However, the
competitiveness of German barley in the Middle East is not yet clear.
With strong demand from this region and weak German prices, then the 1.3
MMT could be the low range of German export estimates.

For French feed barley surpluses to be exported to the Middle East, a
good level of export subsidy would be needed. Without this, French
barley stocks are expected to rise by 1.2 MMT of which around 1 MMT
would be to intervention.

**Stocks**

With reduced feed demand and if EU barley is not particularly
competitive on international markets, then stocks could rise during MY
04/05 from 5.3 MMT to 12.2 MMT. Up to 4 MMT of barley could end up in
intervention in Germany alone, with 1 MMT having been offered during the
first month of intervention, November.

# Corn

+---------------------+-------+-------+-------+-------+-------+-------+
| **Country**         | **EU  |       |       |       |       |       |
|                     | -25** |       |       |       |       |       |
+---------------------+-------+-------+-------+-------+-------+-------+
| **Commodity**       | ##    |       |       |       | (1000 |       |
|                     | ##### |       |       |       | HA)   |       |
|                     |  Corn |       |       |       | (1000 |       |
|                     |       |       |       |       | MT)   |       |
+---------------------+-------+-------+-------+-------+-------+-------+
|                     | 2002  | *     | 2003  | **    | 2004  | **    |
|                     |       | *Revi |       | Estim |       | Forec |
|                     |       | sed** |       | ate** |       | ast** |
+---------------------+-------+-------+-------+-------+-------+-------+
|                     | USDA  | *     | USDA  | *     | USDA  | *     |
|                     | Off   | *Post | Off   | *Post | Off   | *Post |
|                     | icial | Est   | icial | Est   | icial | Est   |
|                     | \[    | imate | \[    | imate | \[    | imate |
|                     | Old\] | \[Ne  | Old\] | \[Ne  | Old\] | \[Ne  |
|                     |       | w\]** |       | w\]** |       | w\]** |
+---------------------+-------+-------+-------+-------+-------+-------+
| **Market Year       | *     |       | *     |       | *     |       |
| Begin**             | *10/2 |       | *10/2 |       | *10/2 |       |
|                     | 002** |       | 003** |       | 004** |       |
+---------------------+-------+-------+-------+-------+-------+-------+
| Area Harvested      | 6006  | 6006  | 6036  | 6236  | 6307  | 6323  |
+---------------------+-------+-------+-------+-------+-------+-------+
| Beginning Stocks    | 4075  | 3807  | 4901  | 4593  | 3128  | 3190  |
+---------------------+-------+-------+-------+-------+-------+-------+
| Production          | 48202 | 48323 | 39158 | 39862 | 52072 | 52154 |
+---------------------+-------+-------+-------+-------+-------+-------+
| TOTAL Mkt. Yr.      | 2731  | 4280  | 5048  | 5390  | 1578  | 2620  |
| Imports             |       |       |       |       |       |       |
+---------------------+-------+-------+-------+-------+-------+-------+
| Oct-Sep Imports     | 2731  | 4280  | 5048  | 5390  | 1578  | 2620  |
+---------------------+-------+-------+-------+-------+-------+-------+
| Oct-Sep Import U.S. | 47    | 45    | 23    | 25    | 19    | 24    |
+---------------------+-------+-------+-------+-------+-------+-------+
| TOTAL SUPPLY        | 55008 | 56410 | 49107 | 49845 | 56778 | 57964 |
+---------------------+-------+-------+-------+-------+-------+-------+
| TOTAL Mkt. Yr.      | 831   | 2000  | 8     | 366   | 936   | 987   |
| Exports             |       |       |       |       |       |       |
+---------------------+-------+-------+-------+-------+-------+-------+
| Oct-Sep Exports     | 831   | 2000  | 8     | 366   | 936   | 987   |
+---------------------+-------+-------+-------+-------+-------+-------+
| Feed Dom.           | 38486 | 38300 | 35210 | 35638 | 40182 | 40406 |
| Consumption         |       |       |       |       |       |       |
+---------------------+-------+-------+-------+-------+-------+-------+
| TOTAL Dom.          | 49276 | 49817 | 45971 | 46289 | 51609 | 51853 |
| Consumption         |       |       |       |       |       |       |
+---------------------+-------+-------+-------+-------+-------+-------+
| Ending Stocks       | 4901  | 4593  | 3128  | 3190  | 4233  | 5124  |
+---------------------+-------+-------+-------+-------+-------+-------+
| TOTAL DISTRIBUTION  | 55008 | 56410 | 49107 | 49845 | 56778 | 57964 |
+---------------------+-------+-------+-------+-------+-------+-------+

Note: All values in 1000 MT, except Area Harvested row in 1000 HA.

Source: FAS EU Posts, not official FAS data.

**Production**

The EU-25 production forecast is revised up marginally to 52.154 MMT
(from 52.07 MMT predicted earlier this year), including a record 4 MMT
crop in Germany and 8 MMT in Hungary. The French harvest of 15.5 MMT was
a return to average yields after last years drought ravaged crop. Some
late rains reduced yields to average levels after an initially brighter
outlook. The Italian crop of 10.9 MMT was a record crop. Despite the use
of late varieties due to delays in planting, which normally give lower
yields, conditions turned out very good to give average yields.

The Polish crop of 2.4 MMT was also a record harvest, though it was
generally of rather poor quality due to being wet so may be used as
silage.

**Corn Production**

  -------------------------------------------- --------------------------
  1000 MT                                      **04/05**

  France                                       16750

  Germany                                      4014

  United Kingdom                               0

  Italy                                        10900

  Spain                                        4700

  Netherlands                                  193

  Austria                                      1600

  Belgium-Luxembourg                           650

  Denmark                                      0

  Finland                                      0

  Greece                                       1700

  Ireland                                      0

  Portugal                                     784

  Sweden                                       0

  **EU15 Total**                               **40,041**

  Cyprus                                       0

  Czech R.                                     538

  Estonia                                      0

  Hungary                                      8000

  Latvia                                       0

  Lithuania                                    0

  Malta                                        0

  Poland                                       2400

  Slovakia                                     850

  Slovenia                                     325

  **NMS 10 total**                             **12,113**

  **EU-25 Total**                              **52,154**
  -------------------------------------------- --------------------------

Source: FAS EU Posts.

**Consumption**

In the Benelux, corn feed use is reported to be close to technical
limits, with corn feed use predicted to rise by 230,000 MT since MY
03/04. However, should the price of corn drift up relative to other feed
ingredients, then feed use levels may decline. Poultry stocks have also
recovered from last years avian influenza outbreak, ensuring continued
corn demand. With widespread domestic availability of corn.

Over 90% of Italian corn goes to feed use. With poultry production
having recovered from a previous dip, demand for corn remains good.

In Poland, the large crop and its poor quality have seen corn prices
fall to at or below the level of feed wheat. It is mainly used for
poultry feed and poultry feed production. Some minimal quantities could
even end up in ethanol production or in intervention. There is no trade
expected for corn in Poland, unless Hungarian corn prices fall to very
low levels.

**Trade**

With a banner Italian harvest, only a few imports are expected from
France, as well as no sorghum and minimal NGFI such as corn gluten feed
and distillers dried grain imports expected.

There is a substantial exportable surplus of corn available in Hungary,
however, it is difficult to predict what might happen to this as not
only are there limits to the storage capacity available in Hungary, but
also there is little in the way of cheap, bulk transport infrastructure
to bring the grain to market elsewhere. Some trade may develop in the
new year with corn being shipped by barge up the Danube to Benelux and
northern Germany.

**Stocks**

Some corn may end up in intervention stocks, including in France (for
the first time since 1997), Germany and Hungary. In these two first
countries, 200,000 MT each could easily end up in intervention. However,
German deliveries into intervention will be limited as there is just one
corn intervention centre in the country. How much will end up in
Hungarian intervention stores is difficult to assess, the above forecast
of MY 04/05 ending stocks of 5.1 MMT is based on up to 1 MMT of
Hungarian corn in intervention.

# Rye

+---------------------+-------+-------+-------+-------+-------+-------+
| **Country**         | **EU  |       |       |       |       |       |
|                     | -25** |       |       |       |       |       |
+---------------------+-------+-------+-------+-------+-------+-------+
| **Commodity**       | #     |       |       |       | (1000 |       |
|                     | ##### |       |       |       | HA)   |       |
|                     | # Rye |       |       |       | (1000 |       |
|                     |       |       |       |       | MT)   |       |
+---------------------+-------+-------+-------+-------+-------+-------+
|                     | 2002  | *     | 2003  | **    | 2004  | **    |
|                     |       | *Revi |       | Estim |       | Forec |
|                     |       | sed** |       | ate** |       | ast** |
+---------------------+-------+-------+-------+-------+-------+-------+
|                     | USDA  | *     | USDA  | *     | USDA  | *     |
|                     | Off   | *Post | Off   | *Post | Off   | *Post |
|                     | icial | Est   | icial | Est   | icial | Est   |
|                     | \[    | imate | \[    | imate | \[    | imate |
|                     | Old\] | \[Ne  | Old\] | \[Ne  | Old\] | \[Ne  |
|                     |       | w\]** |       | w\]** |       | w\]** |
+---------------------+-------+-------+-------+-------+-------+-------+
| **Market Year       | *     |       | *     |       | *     |       |
| Begin**             | *07/2 |       | *07/2 |       | *07/2 |       |
|                     | 002** |       | 003** |       | 004** |       |
+---------------------+-------+-------+-------+-------+-------+-------+
| Area Harvested      | 2882  | 2884  | 2569  | 2570  | 2738  | 2788  |
+---------------------+-------+-------+-------+-------+-------+-------+
| Beginning Stocks    | 6514  | 6514  | 6125  | 6170  | 3654  | 3986  |
+---------------------+-------+-------+-------+-------+-------+-------+
| Production          | 9168  | 9170  | 6920  | 6904  | 8784  | 9956  |
+---------------------+-------+-------+-------+-------+-------+-------+
| TOTAL Mkt. Yr.      | 491   | 443   | 308   | 162   | 127   | 39    |
| Imports             |       |       |       |       |       |       |
+---------------------+-------+-------+-------+-------+-------+-------+
| Oct-Sep Imports     | 549   | 443   | 25    | 162   | 127   | 39    |
+---------------------+-------+-------+-------+-------+-------+-------+
| Oct-Sep Import U.S. | 0     | 1     | 0     | 1     | 0     | 0     |
+---------------------+-------+-------+-------+-------+-------+-------+
| TOTAL SUPPLY        | 16173 | 16127 | 13353 | 13236 | 12565 | 13981 |
+---------------------+-------+-------+-------+-------+-------+-------+
| TOTAL Mkt. Yr.      | 640   | 698   | 421   | 512   | 575   | 435   |
| Exports             |       |       |       |       |       |       |
+---------------------+-------+-------+-------+-------+-------+-------+
| Oct-Sep Exports     | 698   | 698   | 421   | 512   | 575   | 435   |
+---------------------+-------+-------+-------+-------+-------+-------+
| Feed Dom.           | 5063  | 5072  | 5073  | 4262  | 4714  | 4951  |
| Consumption         |       |       |       |       |       |       |
+---------------------+-------+-------+-------+-------+-------+-------+
| TOTAL Dom.          | 9408  | 9259  | 9278  | 8738  | 9109  | 9745  |
| Consumption         |       |       |       |       |       |       |
+---------------------+-------+-------+-------+-------+-------+-------+
| Ending Stocks       | 6125  | 6170  | 3654  | 3986  | 2881  | 3801  |
+---------------------+-------+-------+-------+-------+-------+-------+
| TOTAL DISTRIBUTION  | 16173 | 16127 | 13353 | 13236 | 12565 | 13981 |
+---------------------+-------+-------+-------+-------+-------+-------+

Note: All values in 1000 MT, except Area Harvested row in 1000 HA.

Source: FAS EU Posts, not official FAS data.

EU rye production recovered from the drought affected MY 03/04 to rise
to just under 10 MMT. German rye area and yields increased noticeably in
2004 to give a MY 04/05 production of 3.809 MMT. Poland, the other key
EU rye producer's output is estimated at 4.22 MMT for MY 04/05.

The German area expansion was in part due to the fact that there was
hardly any winterkill in 2004 compared to 2003. Often farmers in the
northern and eastern parts of Germany do not have any other option than
planting rye in their marginal fields. However, the construction of
three ethanol plants, which use rye and wheat as a feedstock, spurred
the planting of rye in northern Germany. The total annual processing
capacity of these plants is estimated at 1.2 MMT of grains. Of this, up
to around 300.000 MT of rye could be distilled to bioethanol.

Currently, prices offered to farmers for rye in the northeast of Germany
range between 60 and 70 Euro per ton. However, traders do not expect
that much volume will be traded at this low price level. Farmers will
store away the rye to wait for higher prices later in the season. More
realistic prices are in the neighborhood of 80 Euro per ton.

Grain production experts foresee that farmers in the northeast will in
the coming years increasingly switch to low-input production methods for
rye. Traditional high-intensity production will no longer be competitive
with prices below 80 Euro per ton. Setting aside grain area may also not
a viable option depending on how new cross compliance rules are framed.
Farmers will only be allowed to plant certain approved cover crops, in
order to prevent mineralization and penetration of nitrogen into
groundwater. Low-intensity rye production might have similar production
cost as cross-compliant set-aside area.

The EU opened a rye export tender during MY 04/05 of one million metric
tons out of intervention storage. Targeted customer regions are the Far
East and Russia. Total German exports are expected to reach 800,000 MT
thereof 400,000 MT to non-EU countries.

# Sorghum

+---------------------+-------+-------+-------+-------+-------+-------+
| **Country**         | **EU  |       |       |       |       |       |
|                     | -25** |       |       |       |       |       |
+---------------------+-------+-------+-------+-------+-------+-------+
| **Commodity**       | ##### |       |       |       | (1000 |       |
|                     | ## So |       |       |       | HA)   |       |
|                     | rghum |       |       |       | (1000 |       |
|                     |       |       |       |       | MT)   |       |
+---------------------+-------+-------+-------+-------+-------+-------+
|                     | 2002  | *     | 2003  | **    | 2004  | **    |
|                     |       | *Revi |       | Estim |       | Forec |
|                     |       | sed** |       | ate** |       | ast** |
+---------------------+-------+-------+-------+-------+-------+-------+
|                     | USDA  | *     | USDA  | *     | USDA  | *     |
|                     | Off   | *Post | Off   | *Post | Off   | *Post |
|                     | icial | Est   | icial | Est   | icial | Est   |
|                     | \[    | imate | \[    | imate | \[    | imate |
|                     | Old\] | \[Ne  | Old\] | \[Ne  | Old\] | \[Ne  |
|                     |       | w\]** |       | w\]** |       | w\]** |
+---------------------+-------+-------+-------+-------+-------+-------+
| **Market Year       | *     |       | *     |       | *     |       |
| Begin**             | *07/2 |       | *07/2 |       | *07/2 |       |
|                     | 002** |       | 003** |       | 004** |       |
+---------------------+-------+-------+-------+-------+-------+-------+
| Area Harvested      | 113   | 113   | 103   | 103   | 107   | 86    |
+---------------------+-------+-------+-------+-------+-------+-------+
| Beginning Stocks    | 24    | 24    | 57    | 57    | 25    | 23    |
+---------------------+-------+-------+-------+-------+-------+-------+
| Production          | 706   | 706   | 408   | 412   | 608   | 486   |
+---------------------+-------+-------+-------+-------+-------+-------+
| TOTAL Mkt. Yr.      | 34    | 15    | 1555  | 1344  | 125   | 235   |
| Imports             |       |       |       |       |       |       |
+---------------------+-------+-------+-------+-------+-------+-------+
| Oct-Sep Imports     | 34    | 15    | 1555  | 1344  | 125   | 235   |
+---------------------+-------+-------+-------+-------+-------+-------+
| Oct-Sep Import U.S. |       |       | 962   | 935   | 0     | 121   |
+---------------------+-------+-------+-------+-------+-------+-------+
| TOTAL SUPPLY        | 764   | 745   | 2020  | 1813  | 758   | 744   |
+---------------------+-------+-------+-------+-------+-------+-------+
| TOTAL Mkt. Yr.      | 2     | 2     | 13    | 7     | 5     | 5     |
| Exports             |       |       |       |       |       |       |
+---------------------+-------+-------+-------+-------+-------+-------+
| Oct-Sep Exports     | 5     | 2     | 13    | 7     | 5     | 5     |
+---------------------+-------+-------+-------+-------+-------+-------+
| Feed Dom.           | 690   | 686   | 1960  | 1762  | 687   | 687   |
| Consumption         |       |       |       |       |       |       |
+---------------------+-------+-------+-------+-------+-------+-------+
| TOTAL Dom.          | 705   | 686   | 1982  | 1783  | 702   | 711   |
| Consumption         |       |       |       |       |       |       |
+---------------------+-------+-------+-------+-------+-------+-------+
| Ending Stocks       | 57    | 57    | 25    | 23    | 51    | 28    |
+---------------------+-------+-------+-------+-------+-------+-------+
| TOTAL DISTRIBUTION  | 764   | 745   | 2020  | 1813  | 758   | 744   |
+---------------------+-------+-------+-------+-------+-------+-------+

Note: All values in 1000 MT, except Area Harvested row in 1000 HA.

Source: FAS EU Posts, not official FAS data.

# Oats

+---------------------+-------+-------+-------+-------+-------+-------+
| **Country**         | **EU  |       |       |       |       |       |
|                     | -25** |       |       |       |       |       |
+---------------------+-------+-------+-------+-------+-------+-------+
| **Commodity**       | ##    |       |       |       | (1000 |       |
|                     | ##### |       |       |       | HA)   |       |
|                     |  Oats |       |       |       | (1000 |       |
|                     |       |       |       |       | MT)   |       |
+---------------------+-------+-------+-------+-------+-------+-------+
|                     | 2002  | *     | 2003  | **    | 2004  | **    |
|                     |       | *Revi |       | Estim |       | Forec |
|                     |       | sed** |       | ate** |       | ast** |
+---------------------+-------+-------+-------+-------+-------+-------+
|                     | USDA  | *     | USDA  | *     | USDA  | *     |
|                     | Off   | *Post | Off   | *Post | Off   | *Post |
|                     | icial | Est   | icial | Est   | icial | Est   |
|                     | \[    | imate | \[    | imate | \[    | imate |
|                     | Old\] | \[Ne  | Old\] | \[Ne  | Old\] | \[Ne  |
|                     |       | w\]** |       | w\]** |       | w\]** |
+---------------------+-------+-------+-------+-------+-------+-------+
| **Market Year       | *     |       | *     |       | *     |       |
| Begin**             | *07/2 |       | *07/2 |       | *07/2 |       |
|                     | 002** |       | 003** |       | 004** |       |
+---------------------+-------+-------+-------+-------+-------+-------+
| Area Harvested      | 2990  | 2998  | 2903  | 2902  | 2842  | 2763  |
+---------------------+-------+-------+-------+-------+-------+-------+
| Beginning Stocks    | 886   | 886   | 965   | 963   | 988   | 928   |
+---------------------+-------+-------+-------+-------+-------+-------+
| Production          | 9331  | 9361  | 8666  | 8702  | 8774  | 8962  |
+---------------------+-------+-------+-------+-------+-------+-------+
| TOTAL Mkt. Yr.      | 7     | 8     | 15    | 6     | 8     | 0     |
| Imports             |       |       |       |       |       |       |
+---------------------+-------+-------+-------+-------+-------+-------+
| Oct-Sep Imports     | 10    | 8     | 25    | 6     | 8     | 0     |
+---------------------+-------+-------+-------+-------+-------+-------+
| Oct-Sep U.S.        | 0     | 0     | 0     | 0     | 0     | 0     |
+---------------------+-------+-------+-------+-------+-------+-------+
| TOTAL SUPPLY        | 10224 | 10255 | 9646  | 9671  | 9770  | 9890  |
+---------------------+-------+-------+-------+-------+-------+-------+
| TOTAL Mkt. Yr.      | 903   | 904   | 375   | 576   | 566   | 405   |
| Exports             |       |       |       |       |       |       |
+---------------------+-------+-------+-------+-------+-------+-------+
| Oct-Sep Exports     | 908   | 904   | 375   | 576   | 566   | 405   |
+---------------------+-------+-------+-------+-------+-------+-------+
| Feed Dom.           | 6748  | 6848  | 6726  | 6535  | 6686  | 6689  |
| Consumption         |       |       |       |       |       |       |
+---------------------+-------+-------+-------+-------+-------+-------+
| TOTAL Dom.          | 8356  | 8388  | 8283  | 8167  | 8241  | 8298  |
| Consumption         |       |       |       |       |       |       |
+---------------------+-------+-------+-------+-------+-------+-------+
| Ending Stocks       | 965   | 963   | 988   | 928   | 963   | 1187  |
+---------------------+-------+-------+-------+-------+-------+-------+
| TOTAL DISTRIBUTION  | 10224 | 10255 | 9646  | 9671  | 9770  | 9890  |
+---------------------+-------+-------+-------+-------+-------+-------+

Note: All values in 1000 MT, except Area Harvested row in 1000 HA.

Source: FAS EU Posts, not official FAS data.

# Mixed Grain

+---------------------+-------+-------+-------+-------+-------+-------+
| **Country**         | **EU  |       |       |       |       |       |
|                     | -25** |       |       |       |       |       |
+---------------------+-------+-------+-------+-------+-------+-------+
| **Commodity**       | ####  |       |       |       | (1000 |       |
|                     | ### M |       |       |       | HA)   |       |
|                     | ixed  |       |       |       | (1000 |       |
|                     | Grain |       |       |       | MT)   |       |
+---------------------+-------+-------+-------+-------+-------+-------+
|                     | 2002  | *     | 2003  | **    | 2004  | **    |
|                     |       | *Revi |       | Estim |       | Forec |
|                     |       | sed** |       | ate** |       | ast** |
+---------------------+-------+-------+-------+-------+-------+-------+
|                     | USDA  | *     | USDA  | *     | USDA  | *     |
|                     | Off   | *Post | Off   | *Post | Off   | *Post |
|                     | icial | Est   | icial | Est   | icial | Est   |
|                     | \[    | imate | \[    | imate | \[    | imate |
|                     | Old\] | \[Ne  | Old\] | \[Ne  | Old\] | \[Ne  |
|                     |       | w\]** |       | w\]** |       | w\]** |
+---------------------+-------+-------+-------+-------+-------+-------+
| **Market Year       | *     |       | *     |       | *     |       |
| Begin**             | *07/2 |       | *07/2 |       | *07/2 |       |
|                     | 002** |       | 003** |       | 004** |       |
+---------------------+-------+-------+-------+-------+-------+-------+
| Area Harvested      | 3703  | 3610  | 3839  | 3642  | 3734  | 3981  |
+---------------------+-------+-------+-------+-------+-------+-------+
| Beginning Stocks    | 1134  | 1134  | 818   | 813   | 467   | 286   |
+---------------------+-------+-------+-------+-------+-------+-------+
| Production          | 13435 | 13122 | 12178 | 11737 | 13283 | 15747 |
+---------------------+-------+-------+-------+-------+-------+-------+
| TOTAL Mkt. Yr.      | 0     | 33    | 0     | 10    | 0     | 0     |
| Imports             |       |       |       |       |       |       |
+---------------------+-------+-------+-------+-------+-------+-------+
| Oct-Sep Imports     | 0     | 33    | 0     | 10    | 0     | 0     |
+---------------------+-------+-------+-------+-------+-------+-------+
| Oct-Sep Import U.S. | 0     | 0     | 0     | 0     | 0     | 0     |
+---------------------+-------+-------+-------+-------+-------+-------+
| TOTAL SUPPLY        | 14569 | 14289 | 12996 | 12560 | 13750 | 16033 |
+---------------------+-------+-------+-------+-------+-------+-------+
| TOTAL Mkt. Yr.      | 17    | 18    | 0     | 0     | 0     | 0     |
| Exports             |       |       |       |       |       |       |
+---------------------+-------+-------+-------+-------+-------+-------+
| Oct-Sep Exports     | 17    | 18    | 0     | 0     | 0     | 0     |
+---------------------+-------+-------+-------+-------+-------+-------+
| Feed Dom.           | 13009 | 12846 | 11832 | 11597 | 12093 | 13910 |
| Consumption         |       |       |       |       |       |       |
+---------------------+-------+-------+-------+-------+-------+-------+
| TOTAL Dom.          | 13734 | 13458 | 12529 | 12274 | 12863 | 14597 |
| Consumption         |       |       |       |       |       |       |
+---------------------+-------+-------+-------+-------+-------+-------+
| Ending Stocks       | 818   | 813   | 467   | 286   | 887   | 1436  |
+---------------------+-------+-------+-------+-------+-------+-------+
| TOTAL DISTRIBUTION  | 14569 | 14289 | 12996 | 12560 | 13750 | 16033 |
+---------------------+-------+-------+-------+-------+-------+-------+

Note: All values in 1000 MT, except Area Harvested row in 1000 HA.

Source: FAS EU Posts, not official FAS data.

There was a substantial rise in mixed grain production in the EU-25,
from 11.7 MMT in 03/04 to 15.7 MMT in MY 04/05. This reflects not only
the recovery from the drought hit 2003 crop, but also, the early 2003
harvest enabled increased plantings of triticale and other mixed grains
in France as a winter crop, giving higher yields.

The higher production is set to be reflected in higher feed use. It is
used mostly as on farm feed, though increasingly it is being used in
compound feed production. For example, in France, 40% of mixed grain is
now used in compound feed. Triticale, which accounts for around one
third of German mixed grain output, is currently around 3 Euros more
expensive than rye. However, it is preferred due to it being perceived
as having better nutritional values.

The increase in stocks is on farm stocks held.

# Related USEU and European Reports

  -- ------------------------------------------------------------------------------- ---
     **Oct 27 2004 \| Czech Republic** \| **Crop                                      
     Update** ![](media/image2.png){width="1.0416666666666666e-2in"                  
     height="3.125e-2in"}                                                            

     *Highlight:* The Czech Ministry of Agriculture raised its preliminary estimate  
     for the Czech 2004 grain crop to 8.5 million MT (compared to the previous       
     estimate of 8.16 million MT). Grain quality is lower due to low protein         
     content. Wheat production returned to normal at 4.8 million MT, an 83.7%        
     increase compared to the previous year.                                         
     ![](media/image2.png){width="1.0416666666666666e-2in"                           
     height="3.125e-2in"}**EZ4024** \| [View the Acrobat                             
     version](http://www.fas.usda.gov/gainfiles/200410/146117816.pdf) \| [Download   
     the MS Word version](http://www.fas.usda.gov/gainfiles/200410/146117816.doc)    
  -- ------------------------------------------------------------------------------- ---

  ------------------------------------------------------------------------------- ---
  **Oct 22 2004 \| Austria** \| **Crop                                             
  Update** ![](media/image2.png){width="1.0416666666666666e-2in"                  
  height="3.125e-2in"}                                                            

  *Highlight:* In 2004, Austrian grain production (excluding corn) amounted to    
  3.4 million MT. This is up 32% compared to last year. Wheat production amounted 
  to 1.7 million MT, rye production totaled 213,500 MT, spring barley totaled     
  551,500 MT, and winter barley reached 455,200 MT. Corn production is expected   
  to reach 1.6 million MT due to a 10% larger acreage.\                           
  ![](media/image2.png){width="8.333333333333333e-3in"                            
  height="2.9861111111111113e-2in"}**AU4028** \| [View the Acrobat                
  version](http://www.fas.usda.gov/gainfiles/200410/146117779.pdf) \| [Download   
  the MS Word version](http://www.fas.usda.gov/gainfiles/200410/146117779.doc)    
  ------------------------------------------------------------------------------- ---

  -- ------------------------------------------------------------------------------- ---
     **Oct 8 2004 \| Germany** \| **German Grain Crop 2004 - 2nd Official             
     Estimate** ![](media/image2.png){width="1.0416666666666666e-2in"                
     height="3.125e-2in"}                                                            

     *Highlight:* The German grain crop has been revised upward by another 740,000   
     tons to 50.8MMT, which resembles a new record crop. The EU intervention prices  
     set the price floor for barley and regular baking wheat. High quality wheat     
     varieties receive price premiums due to quality problems in Great Britain and   
     some Mediterranean regions.\                                                    
     ![](media/image2.png){width="1.0416666666666666e-2in"                           
     height="3.125e-2in"}**GM4037** \| [View the Acrobat                             
     version](http://www.fas.usda.gov/gainfiles/200410/146117626.pdf) \| [Download   
     the MS Word version](http://www.fas.usda.gov/gainfiles/200410/146117626.doc)    
  -- ------------------------------------------------------------------------------- ---

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  **Oct 7 2004 \| Spain** \| **Spain\'s Sorghum Import                             
  Quota** ![](media/image2.png){width="1.0416666666666666e-2in"                   
  height="3.125e-2in"}                                                            

  *Highlight:* For the first time in recent history since the 1996 Spain could    
  start its calendar year sorghum quota year without any Roll-over.\              
  ![](media/image2.png){width="1.0416666666666666e-2in"                           
  height="3.125e-2in"}**SP4021** \| [View the Acrobat                             
  version](http://www.fas.usda.gov/gainfiles/200410/146117591.pdf) \| [Download   
  the MS Word version](http://www.fas.usda.gov/gainfiles/200410/146117591.doc)    
  ------------------------------------------------------------------------------- ---

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  **Oct 6 2004 \| Poland** \| **Grain                                              
  Update** ![](media/image2.png){width="1.0416666666666666e-2in"                  
  height="3.125e-2in"}                                                            

  *Highlight:* The latest official estimates confirm new record level 2004 grain  
  production in Poland. The official crop estimates are within the range of 1-2   
  MMT higher than the official July estimates and about one MMT higher than       
  previous FAS Warsaw estimates.\                                                 
  ![](media/image2.png){width="1.0416666666666666e-2in"                           
  height="3.125e-2in"}**PL4033** \| [View the Acrobat                             
  version](http://www.fas.usda.gov/gainfiles/200410/146107695.pdf) \| [Download   
  the MS Word version](http://www.fas.usda.gov/gainfiles/200410/146107695.doc)    
  ------------------------------------------------------------------------------- ---

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  **Sep 21 2004 \| Germany** \| **German Grain Harvest                             
  2004** ![](media/image2.png){width="1.0416666666666666e-2in"                    
  height="3.125e-2in"}                                                            

  *Highlight:* The German grain harvest 2004 broke a new record amounting to 50.1 
  MMT compared to 39.4 MMT in drought stricken year 2003 and the six year average 
  of 44.5 MMT. Grain quality is good. Prices have already dropped significantly   
  compared to one year ago. The intervention price will set the floor price for   
  baking wheat, barley and corn. Rye prices are no longer supported by the EU     
  intervention system. The plentiful crop may result in intervention purchases of 
  about five million tons of barley and one million ton of baking wheat. In MY    
  2004/05, three new ethanol plants processing grains will come into operation    
  with a total annual processing capacity of 1.2 MMT.\                            
  ![](media/image2.png){width="1.0416666666666666e-2in"                           
  height="3.125e-2in"}**GM4032** \| [View the Acrobat                             
  version](http://www.fas.usda.gov/gainfiles/200409/146107548.pdf) \| [Download   
  the MS Word version](http://www.fas.usda.gov/gainfiles/200409/146107548.doc)    
  ------------------------------------------------------------------------------- ---

  ------------------------------------------------------------------------------- ---
  **Sep 3 2004 \| Hungary** \| **Crop Situation                                    
  Update** ![](media/image2.png){width="1.0416666666666666e-2in"                  
  height="3.125e-2in"}                                                            

  *Highlight:* Hungary's wheat, barley, triticale, rye and oats harvest amounted  
  to 8 million metric tons (MMT) this year. Wheat quality is excellent with       
  approximately 75 to 80 percent of milling quality. Hungarian wheat will be      
  competitive with U.S. and Canadian wheat in other EU markets, particularly in   
  Italy, Austria and Germany. The spring barley crop is also of good quality with 
  350,000 MT going to malting. The corn crop appears good and is forecasted to be 
  at a record 7.6 MMT. ![](media/image2.png){width="1.0416666666666666e-2in"      
  height="3.125e-2in"}\                                                           
  **HU4015** \| [View the Acrobat                                                 
  version](http://www.fas.usda.gov/gainfiles/200409/146107427.pdf) \| [Download   
  the MS Word version](http://www.fas.usda.gov/gainfiles/200409/146107427.doc)    
  ------------------------------------------------------------------------------- ---

  ------------------------------------------------------------------------------- ---
  **Sep 2 2004 \| Czech Republic** \| **Crop Situation                             
  Update** ![](media/image2.png){width="1.0416666666666666e-2in"                  
  height="3.125e-2in"}                                                            

  *Highlight:* The Czech Ministry of Agriculture forecasts this year\'s grain     
  production to be slightly above average at around 8 million MT (this compares   
  to last year's below-average production of 5.7 million MT). Yields will be      
  above average. Grain and oilseed quality will be good except for low protein    
  content. Due to cold weather in the spring, corn planting was delayed. Although 
  yield is expected to be good, harvested area will be somewhat smaller than      
  planted area, and corn will be imported from Hungary. Most Czech grains will be 
  sold at EU intervention prices in the fall.                                     
  ![](media/image2.png){width="1.0416666666666666e-2in" height="3.125e-2in"}\     
  **EZ4020** \| [View the Acrobat                                                 
  version](http://www.fas.usda.gov/gainfiles/200408/146107345.pdf) \| [Download   
  the MS Word version](http://www.fas.usda.gov/gainfiles/200408/146107345.doc)    
  ------------------------------------------------------------------------------- ---

  ------------------------------------------------------------------------------------------- ---
  **Aug 27                                                                                     
  2004 \| Portugal** \| **Voluntary** ![](media/image2.png){width="1.0416666666666666e-2in"   
  height="3.125e-2in"}                                                                        

  *Highlight:* The Canadian Wheat Board (CWB) appears to have seized the market for           
  high-quality milling wheat in Portugal. 1 USD = 0.80                                        
  €![](media/image2.png){width="1.0416666666666666e-2in" height="3.125e-2in"}\                
  **PO4013** \| [View the Acrobat                                                             
  version](http://www.fas.usda.gov/gainfiles/200408/146107258.pdf) \| [Download the MS Word   
  version](http://www.fas.usda.gov/gainfiles/200408/146107258.doc)                            
  ------------------------------------------------------------------------------------------- ---

  ------------------------------------------------------------------------------- ---
  **Aug 17 2004 \| Poland** \| **Grain Production and Use Up in                    
  Poland** ![](media/image2.png){width="1.0416666666666666e-2in"                  
  height="3.125e-2in"}                                                            

  *Highlight:* A near record grain crop, 4.5 MMT larger than in 2003, has created 
  fear among farmers that they will face severe marketing problems immediately    
  after harvest. At the same time increased profits for livestock resulting from  
  increased demand following Poland\'s May 1, 2004 EU accession will result in    
  larger than previously estimated grain feed use.                                
  ![](media/image2.png){width="1.0416666666666666e-2in" height="3.125e-2in"}\     
  **PL4027** \| [View the Acrobat                                                 
  version](http://www.fas.usda.gov/gainfiles/200408/146107171.pdf) \| [Download   
  the MS Word version](http://www.fas.usda.gov/gainfiles/200408/146107171.doc)    
  ------------------------------------------------------------------------------- ---

  ------------------------------------------------------------------------------- ---
  **Jul 29 2004 \| Slovakia** \| **Crop Situation                                  
  Update** ![](media/image2.png){width="1.0416666666666666e-2in"                  
  height="3.125e-2in"}                                                            

  *Highlight:* Total grain production is estimated to be at around 2.9 million MT 
  in 2004, up by 54 percent compared to last year. Due to this year\'s favorable  
  weather, average yields are expected to be higher for all commodities. Almost   
  50 percent of grain production is used as feed; 28 percent goes to food use; 16 
  percent goes to exports. In 2005, malt, wheat, and cornstarch exports are       
  expected to increase. ![](media/image2.png){width="1.0416666666666666e-2in"     
  height="3.125e-2in"}\                                                           
  **LO4012** \| [View the Acrobat                                                 
  version](http://www.fas.usda.gov/gainfiles/200407/146106966.pdf) \| [Download   
  the MS Word version](http://www.fas.usda.gov/gainfiles/200407/146106966.doc)    
  ------------------------------------------------------------------------------- ---

  ------------------------------------------------------------------------------- ---
  **Jun 24 2004 \| Hungary** \| **Pre-harvest Grain                                
  Prospects** ![](media/image2.png){width="1.0416666666666666e-2in"               
  height="3.125e-2in"}                                                            

  *Highlight:* Hungary\'s wheat crop is expected to be 1.5 million MT above the   
  2003 harvest. At present, the barley crop is expected to be above 1.1 million   
  MT. High wheat crop forecasts in Europe, financing, and storage limitations may 
  aggravate crop handling. Trade sources expect increased wheat exports to other  
  EU countries, as well as to third countries.                                    
  ![](media/image2.png){width="1.0416666666666666e-2in" height="3.125e-2in"}\     
  **HU4013** \| [View the Acrobat                                                 
  version](http://www.fas.usda.gov/gainfiles/200406/146106635.pdf) \| [Download   
  the MS Word version](http://www.fas.usda.gov/gainfiles/200406/146106635.doc)    
  ------------------------------------------------------------------------------- ---

  ------------------------------------------------------------------------------- ---
  **Jun 14 2004 \| Spain** \| **New                                                
  Crop** ![](media/image2.png){width="1.0416666666666666e-2in"                    
  height="3.125e-2in"}                                                            

  *Highlight:* Wet and relatively cool weather conditions, prevalent throughout   
  most of Peninsular Spain since late March, have substantially improved          
  prospects for the winter grain crop. Harvesting has begun in southern areas and 
  good yields are reported. Prices for grains are declining dramatically and a    
  higher use of grain in feed formulas is expected in MY                          
  2004/05.![](media/image2.png){width="1.0416666666666666e-2in"                   
  height="3.125e-2in"}\                                                           
  **SP4014** \| [View the Acrobat                                                 
  version](http://www.fas.usda.gov/gainfiles/200406/146106536.pdf) \| [Download   
  the MS Word version](http://www.fas.usda.gov/gainfiles/200406/146106536.doc)    
  ------------------------------------------------------------------------------- ---

  -------------------------------------------------------------------------------------- ---
  **May 11                                                                                
  2004 \| Poland** \| **Annual** ![](media/image2.png){width="1.0416666666666666e-2in"   
  height="3.125e-2in"}                                                                   

  *Highlight:* Polish MY 2004/05 grain production is expected to rise 12 percent due to  
  much improved weather conditions compared to MY 2003/04 weather related losses. MY     
  04/05 imports are expected to decline due to reduced swine production, stocks will be  
  replenished, and exports will be negligible. Poland joined the EU on May 1, 2004. It   
  is undergoing a policy transition period, but farmer incomes are generally expected to 
  rise. Poland is now in an internal EU-25 market. It will implement EU consistent       
  third-country grain trade policy including elimination of weed seed zero tolerance     
  trade constraints. ![](media/image2.png){width="1.0416666666666666e-2in"               
  height="3.125e-2in"}\                                                                  
  **PL4011** \| [View the Acrobat                                                        
  version](http://www.fas.usda.gov/gainfiles/200405/146106254.pdf) \| [Download the MS   
  Word version](http://www.fas.usda.gov/gainfiles/200405/146106254.doc)                  
  -------------------------------------------------------------------------------------- ---

[^1]: See GAIN report E34044, 'Deconstructing Decoupling' for more
    details on how the CAP Reform will be implemented in different
    Member States.
    http://www.fas.usda.gov/gainfiles/200408/146107107.pdf

[^2]: The new farm payments under the CAP do not oblige farmers to
    produce; however, they must meet certain minimum standards defined
    as cross-compliance rules, including maintaining the land in 'good
    agricultural order'. If the rules are written in such a way that
    farmers would have to undertake some form of work on the fields, it
    may be more cost effective for them to plant them at the same time.

[^3]: The 2003 CAP Reform sets up a system of (largely) decoupled direct
    income payments to farmers. In this context, border protection,
    export subsidies, guaranteed minimum prices and intervention might
    seem anachronistic. Intervention is expected to be phased out for
    sugar in the next few years (though intervention was only ever a
    theoretical possibility) and has been limited for the rice sector by
    the 2003 reform. However, attempts by the European Commission to
    lower intervention prices for cereals in 2003 were strongly rejected
    by Member States, France in particular. The Commission did however
    succeed in getting intervention for rye scrapped, as well as
    lowering the monthly increments to the intervention price.