""

Voluntary Report - public distribution

**Date:** 12/11/2003

**GAIN Report Number:** E23239

E23239

**European Union**

**Grain and Feed**

**Semi-Annual**

**2003**

**Approved by:**

![](media/image1.wmf)Christine Strossman

U.S. Mission to the EU, Brussels

**Prepared by:**

Peter Talks

**Report Highlights:**

A severe drought and heat wave across southern Europe reduced EU-15
grain production from 210 MMT in 2002/03 to 184.8 MMT in 2003/04.

This has helped to create a shortage of feed grains in Europe, leading
to higher prices and reduced exports. Poor harvests in Central and
Eastern Europe as well as the Black Sea region have reduced import
availability with imports of wheat expected from the U.S. as well as
corn imports from South America.

Continued high prices and a tight EU grain balance sheet are expected to
continue till the summer of 2004. Should the production outlook for
04/05 look poor, EU markets could react nervously.

Includes PSD Changes: No

Includes Trade Matrix: No

Unscheduled Report

Brussels USEU \[BE2\]

\[E2\]

Table of Contents

[Introduction 2](#introduction)

[Executive Summary 3](#executive-summary)

[Wheat 4](#wheat)

[2003/04 Production 4](#production)

[Consumption 7](#consumption)

[Trade 7](#trade)

[Stocks 9](#stocks)

[Barley 10](#barley)

[Corn 12](#corn)

[Rye 15](#rye)

[Sorghum 16](#sorghum)

[Oats 17](#oats)

[Mixed Grain 18](#mixed-grain)

[Rice 19](#rice)

[EU feed grain for 2003/04 21](#eu-feed-grain-for-200304)

[Planting Outlook for 2004/05 22](#planting-outlook-for-200405)

[Policy 24](#policy)

[Related USEU and European Post Reports:
25](#related-useu-and-european-post-reports)

# Introduction

This report updates the grains outlook in the European Union, following
on from the European Union Grains Annual Report in May 2003. It
concentrates on the current production and market outlook for the
Marketing Year (MY) 03/04 as well as including a description of those
planting intentions known so far for 2004/05.

In May 2004, ten New Member States (NMS) will join the EU, namely, the
Czech Republic, Cyprus, Estonia, Hungary, Latvia, Lithuania, Malta,
Poland, Slovakia and Slovenia. Currently, this FAS GAIN report reports
all PSDs for the EU-15. As the EU will expand to 25 during the current
MY, figures for the EU-25 are included on an indicative basis.

This is a consolidated EU-15 report prepared with 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

Yvan Polet from FAS Brussels

Roswitha Krautgartner from FAS Vienna

Petra Choteborska from FAS Prague

Ferenc Nemes from FAS Budapest

Wlodzimierz Makowski from FAS Warsaw

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

MT = Metric ton

MY = Marketing Year.

# Executive Summary

In Marketing Year (MY) 03/04, drought and dry conditions reduced the
EU-15 wheat harvest to less than 92 metric million tons (MMT). Total
EU-15 coarse grain production in MY 03/04, is estimated to have fallen
to 92.5 MMT, to give a total EU-15 grain output of 184.2 MMT.

In 2002/03, EU-15 wheat output was 103.7 MMT, and a coarse grain output
was 105 MMT, to give total grains output of 208.6 MMT. This was combined
with a high level of wheat imports. Wheat imports totaled over 12 MMT,
notably from the Black Sea region and lead to a higher use of wheat as
feed, up over 15% from 01/02 and record wheat exports of 16 MMT.

The dramatic reduction in domestic grain availability during MY 03/04,
with production declining by 24 MMT compared to the previous year, has
pushed prices to high levels, and combined with the Euro's strength
against the US Dollar, reduced expected EU exports in MY 03/04 to 8 MMT
for wheat and 4.5 MMT for coarse grains.

The European grains balance sheet is currently tight, with continued
strong domestic prices seen continuing until the new season crop becomes
available in the Summer of 2004. The European Commission's response to
the tightness on grain markets has been to suspend export subsidies and
slowly release intervention stocks onto the domestic market during the
course of the year. Whether this will be enough to keep prices in check
and provide sufficient domestic grain availability remains to be seen
over the next couple of months. It is reported that French feed
manufacturers' requirements are essentially uncovered after January or
February. Based on the current market situation, the European Commission
are not expected to make any important policy changes to alleviate the
situation.

Instead, it is expected that the high prices available on EU markets
will encourage the imports of grains, including over 2 MMT of wheat and
around 1 MMT of sorghum from the US, as well as a 2.4 MMT increase in
corn imports to 5.4 MMT in MY 03/04. This would be sourced mainly from
South America and could even include some shipments from China. This
estimate does however rely on there being sufficient quantities of non
biotech corn being available. The EU will not however be importing
anything but minor quantities of US corn as not all the biotech
varieties used in the US are permitted to be marketed in the EU. This
year has also seen a rise in the imports of non grain feed ingredients
(NGFI) including tapioca and cassava.

Stocks, both public and private will be drawn down heavily during the
03/04 MY, with EU-15 grains stocks falling from 33 MMT to 19 MMT. The
European Commission has announced reduction in set-aside for 2004/05
from 10% to 5% in order to stimulate EU grains production in 04/05. This
measure is tentatively expected to increase EU-15 grain production by 5
to 7 MMT in 04/05.

A good harvest in 04/05 would serve to replenish depleted stock levels.
With stock levels low, any bad news for the 04/05 production outlook
will be likely to create nervousness on the markets.

The situation in the New Member States (NMS) of central and eastern
Europe is also of poor harvests and extreme tightness in domestic
balance sheets. Poland has an estimated 2.5 MMT feed grain deficit,
though with domestic prices currently lower than those in neighboring
countries, it is difficult to see this deficit being plugged without
important policy or market changes.

# Wheat

**PSD Table: EU-15, Wheat**

  --------------- ------------ ------------- ---------- -------------- ---------- -------------- ---------
  **Country**     **European                                                                     
                  Union**                                                                        

  **Commodity**   **Wheat**                                            (1000                     
                                                                       HA)(1000                  
                                                                       MT)                       

                  2001         **Revised**   2002       **Estimate**   2003       **Forecast**   UOM

                  USDA         **Post        USDA       **Post         USDA       **Post         
                  Official     Estimate      Official   Estimate       Official   Estimate       
                  \[Old\]      \[New\]**     \[Old\]    \[New\]**      \[Old\]    \[New\]**      

  **Market Year                **07/2001**              **07/2002**               **07/2003**    MM/YYYY
  Begin**                                                                                        

  Area Harvested  16476        **16466**     17991      **17709**      17100      **17028**      (1000 HA)

  Beginning       9749         **11951**     7965       **11277**      11737      **13158**      (1000 MT)
  Stocks                                                                                         

  Production      90988        **90751**     103872     **103692**     92000      **91637**      (1000 MT)

  TOTAL Mkt. Yr.  9822         **9828**      12000      **11624**      4000       **5234**       (1000 MT)
  Imports                                                                                        

  Jul-Jun Imports 9822         **9828**      12000      **11624**      4000       **5234**       (1000 MT)

  Jul-Jun Import  1993         **2095**      1175       **1228**       0          **2162**       (1000 MT)
  U.S.                                                                                           

  TOTAL SUPPLY    110559       **112530**    123837     **126593**     107737     **110029**     (1000 MT)

  TOTAL Mkt. Yr.  11494        **11834**     16000      **16509**      8500       **8060**       (1000 MT)
  Exports                                                                                        

  Jul-Jun Exports 11494        **11834**     16000      **16509**      8500       **8060**       (1000 MT)

  Feed Dom.       46497        **40268**     51280      **47255**      48000      **43484**      (1000 MT)
  Consumption                                                                                    

  TOTAL Dom.      91100        **89419**     96100      **96926**      93000      **93261**      (1000 MT)
  Consumption                                                                                    

  Ending Stocks   7965         **11277**     11737      **13158**      6237       **8708**       (1000 MT)

  TOTAL           110559       **112530**    123837     **126593**     107737     **110029**     (1000 MT)
  DISTRIBUTION                                                                                   
  --------------- ------------ ------------- ---------- -------------- ---------- -------------- ---------

## 2003/04 Production

A severe drought from late spring through the summer lead to reduced
EU-15 wheat output. The drought and allied heat wave particularly
impacted on production across the 'South' of the EU: Portugal, Spain,
France, Italy, Austria, and Greece.

The French wheat crop in 2003/04 was below average due to some
winterkill resulting from winter frosts, coupled with a dry spring and
the only summer rainfall being in may to early June. This has lead to a
high quality crop, with higher than normal protein levels, averaging
11.5% to 12% and up to 14% averages in some areas.

Across parts of central Europe (Germany, Poland, Hungary, the Czech
Republic, Austria and some parts of France) very cold conditions during
the winter lead to higher than usual levels of winterkill. Following the
record crop in 2002/03, wheat production was down by 8 to 9% in Germany
for MY 03/04. In Austria, some winter kill combined with a severe
drought combined to reduce soft wheat yields by 19%. However, this was
partially offset by hard wheat yields rising 29% and a small increase in
area planted to hard wheat varieties.

In Northern Europe, the same dry and sunny summer conditions helped to
produce an average crop in the UK, and Scandinavia, while the
Netherlands recorded a record crop.

In Italy, imports are set to exceed domestic production during MY 03/04.
The durum crop is generally poor due to excess rains during the 02/03
winter, particularly in southern Italy.

+------------------------+--------------+--------------+--------------+
| #                      |              |              |              |
| ##### Wheat Production |              |              |              |
+------------------------+--------------+--------------+--------------+
| 1000 MT                | **01/02**    | **02/03**    | **03/04**    |
+------------------------+--------------+--------------+--------------+
| France                 | 31572        | 39019        | 30810        |
+------------------------+--------------+--------------+--------------+
| Germany                | 22838        | 20818        | 19269        |
+------------------------+--------------+--------------+--------------+
| United Kingdom         | 11570        | 15973        | 14332        |
+------------------------+--------------+--------------+--------------+
| Italy                  | 6289         | 7677         | 6568         |
+------------------------+--------------+--------------+--------------+
| Spain                  | 4937         | 6782         | 6400         |
+------------------------+--------------+--------------+--------------+
| Netherlands            | 991          | 1057         | 1228         |
+------------------------+--------------+--------------+--------------+
| Austria                | 1439         | 1404         | 1165         |
+------------------------+--------------+--------------+--------------+
| Belgium-Luxembourg     | 1510         | 1739         | 1715         |
+------------------------+--------------+--------------+--------------+
| Denmark                | 4664         | 4040         | 4725         |
+------------------------+--------------+--------------+--------------+
| Finland                | 489          | 570          | 550          |
+------------------------+--------------+--------------+--------------+
| Greece                 | 1217         | 1160         | 1230         |
+------------------------+--------------+--------------+--------------+
| Ireland                | 731          | 963          | 750          |
+------------------------+--------------+--------------+--------------+
| Portugal               | 159          | 390          | 315          |
+------------------------+--------------+--------------+--------------+
| Sweden                 | 2345         | 2100         | 2580         |
+------------------------+--------------+--------------+--------------+
| **EU15 Total**         | **90,751**   | **103,692**  | **91,637**   |
+------------------------+--------------+--------------+--------------+
| Cyprus                 |              |              | 10           |
+------------------------+--------------+--------------+--------------+
| Czech R.               |              |              | 2623         |
+------------------------+--------------+--------------+--------------+
| Estonia                |              |              | 130          |
+------------------------+--------------+--------------+--------------+
| Hungary                |              |              | 2900         |
+------------------------+--------------+--------------+--------------+
| Latvia                 |              |              | 400          |
+------------------------+--------------+--------------+--------------+
| Lithuania              |              |              | 1050         |
+------------------------+--------------+--------------+--------------+
| Malta                  |              |              | 5            |
+------------------------+--------------+--------------+--------------+
| Poland                 |              |              | 7940         |
+------------------------+--------------+--------------+--------------+
| Slovakia               |              |              | 950          |
+------------------------+--------------+--------------+--------------+
| Slovenia               |              |              | 70           |
+------------------------+--------------+--------------+--------------+
| **NMS 10 total**       |              |              | **16,078**   |
+------------------------+--------------+--------------+--------------+
| **EU-25 Total**        |              |              | **107,715**  |
+------------------------+--------------+--------------+--------------+

Source: FAS EU Posts.

**Estimated Wheat Balance for NMS-10 and EU-25 for 2003/04**

  -------------------------- -------------- -------------- --------------
  **2003/2004**              **NMS 10**     **EU-15**      **EU-25**

  Area                       4986           17028          22014

  Beginning Stocks           3433           13158          16591

  Production                 16078          92130          107715

  MY Imports                 2190           5234           6613

  Jul-Jun Import U.S.        300            2162           2462

  **Total Supply**           **21701**      **110522**     **130919**

  MY Exports                 915            8560           8163

  Dom Consumption            18635          43477          111889

  Feed                       7455           93254          50932

  Ending Stocks              2151           8708           10859

  **Tot Distribution**       **21701**      **110522**     **130911**
  -------------------------- -------------- -------------- --------------

[New Member States]{.underline}

A poor wheat harvest in Hungary is leading to considerable tightness in
Hungarian markets. In line with neighboring countries, Polish grain
yields were impacted by the weather conditions, with overall grains
yields declining 12% year on year, 15% for wheat.

Wheat production in the Czech Republic for MY 03/04 declined to 2.6 MMT
a fall of 800-900,000 MT over the two previous campaigns.
Over-production in these two years had lead to reduced plantings for
03/04 as well as the impact of flooding in the winter of 2002 and higher
than typical winter kill levels. This lead to a 40% drop in winter wheat
production offset partially by increased spring wheat.

## Consumption

During the MY 02/03, feed consumption of wheat was boosted by
substantial imports of wheat from the Black Sea region as well as good
domestic availability. However, for the MY 03/04, an 11 MMT drop in EU
wheat production to 92 MMT, as well as very poor harvests in Russia, the
Ukraine and the countries of central and eastern Europe has reduced the
availability of wheat. This is coupled by with a 9 MMT reduction in EU
corn output in MY 03/04.

Therefore, feed consumption of wheat is estimated to decline from 47.3
MMT in 2002/03 to 43.5 MMT in 2003/04.

In France, the higher prices resulting from the poor harvest will lead
to reduced exports and decreases in both feed use and a running down of
stocks.

In Spain, consumption of feed wheat is set to decline dramatically in
2003/04 due to high wheat prices, from 6.5 MMT in 02/03, to 4.5 MMT in
03/04. Feed wheat is expected to be replaced partly by sorghum from the
U.S., Corn, some non grain feed ingredients (NGFI) and improved pasture
conditions reducing some feed requirements, particularly in the
extensive livestock areas where over 23 m sheep 3m goats and 2 m cattle
are farmed. This is due to Fall rainfall being 50% higher than normal,
encouraging very good grass growth.

German feed use is set at 9 MMT, and can be defined this year as a
'protein feed' with protein levels up to 14%. What would have been
milling wheat is going to be used as feed wheat. However, demand for
quality wheat remains strong in Germany, with roughly 40% of the crop of
'A' quality. Selling opportunities for this class of wheat are often
better.

The UK feed sector is characterized by high prices for feed and feed
substitutes, coupled with high freight rates. This may lead to increased
on farm feed consumption, particularly as high levels of forage have
already been used up due to the dry summer.

In the Netherlands, it is also expected that more rye, barley, sunflower
meal (including 0.5 MMT from the Black Sea region) and soymeal will be
incorporated into feed use. There is a question mark over whether corn
gluten feed will be used in fee.

## Trade

The level of exports from France depends on the evolution of the Euro
exchange rate, it may however be that some of the expected exports go to
feed rations domestically. Some wheat will probably be exported to Italy
and Spain. Currently, Belgian imports from France appear to be
continuing at a typical pace despite the high prices.

Spain has already imported 300k US wheat so far this season, with a
similar quantity expected between now and the end of 03/04. Of this,
most is high quality wheat plus around 60,000 MT of soft red wheat.

In Germany however, prices are firm and rising. The trade expects the
current strong price outlook to last until at least early in the new
year when southern hemisphere crops become available. German imports are
predicted to decline by 350k due to the lack of supply, as traditional
suppliers to the German market do not have any export availability.
Exports are expected to fall by 1 MMT year on year, though there is a
notable increase in exports to the Benelux as yields in the Länder next
to these countries were particularly favorable.

In the UK, imports are expected to fall slightly due to the quality of
some of the domestically produced crop, though there remains a demand
for imports with specific characteristics so the UK import figure could
be revised up slightly.

February is seen as a key period for price expectations for the
remainder of the 03/04 MY as the size and quality of the Latin American
and Australian crops become known, expectations could also be impacted
by winter developments in the Black Sea region. Currently, shipping
costs from Australia would preclude imports from this source, which
could encourage the current high wheat and feed prices to persist for
longer at these levels.

Italian imports could exceed 2 MMT for durum, sourced from southern
Europe, and North America, including the U.S. This includes some
shipments of low grade, #4, Canadian durum that have been reported.

During the 02/03 MY, much feed quality wheat was imported into Italy
from the Black Sea region, including over 1 MMT in the first half of
2003. This exceeds the normal feed requirements, so it is likely that
some of this will be consumed during the 03/04 MY. For the rest of
Italian feed wheat requirements, these are expected to be sourced
intra-EU. Corn gluten is generally seen as too risky to import due to
Italy's ban on even approved varieties of biotech corn.

In the Netherlands, imports are set to fall due to good domestic
availability. Few Dutch imports are expected from the U.S. due to low
availability and high freight charges. High internal shipping costs due
to low levels of the main rivers such as the Rhine are also expected to
reduce imports of corn from Hungary. Several shipments of US wheat are
reported to be underway towards Belgium. The trade is expecting an
increase in tapioca imports, roughly 1 MMT more than in 02/03. The first
tapioca imports for ten years have been recorded in Belgium during the
current marketing year. Netherlands wheat exports are also predicted to
decline due to the high price of feed wheat.

Belgian flour exporters are reported to be having significant problems
as they are uncompetitive on third country markets which normally
accounts for 50% of flour exports. Currently, Belgian flour can be
exported to central Africa for \$310/MT as opposed to \$230 from
Argentina.

Austrian exports are expected to decline due to the low availability of
domestic feed grains. Imports have also declined due to the lower
availability in supplying countries Hungary and the Czech Republic.

Hungarian exports are expected to decline to 700,000 tons for 03/04. The
Hungarian government has reportedly been considering an export ban for
grains, though it is considered unlikely that they will implement this.
However, local markets report that wheat and corn are 'evaporating',
being exported truck load by truck load. Farmers are holding on to their
grain supplies with little grain available on domestic markets. It is
expected that some good quality wheat and corn will be exported to
neighboring countries, replaced by low quality feed grain imports. The
price sensitivity of domestic users favors the use of the cheapest
grains that can be sourced. Exports from the US to Hungary are
considered unlikely at current prices as the cost of transshipping from
Adriatic ports to Hungary is approximately \$35 to \$37 per MT.

For the Czech Republic, exports are expected to decline in 03/04. So far
in the MY, 55,000 MT are reported to have been exported, with little
more expected during the rest of the year due to domestic scarcity of
feed grains keeping prices high. In addition, due to its landlocked
geography, there is a certain degree of isolation from international
markets due to high transport costs. Trade sources indicate that while
prices have recently risen to around €125 for milling wheat, though
price expectations for Spring 2004 are around €140. This figure is based
on the expectation that no changes to government policy will occur.
Should any form of export restrictions be imposed then prices are more
likely to remain at their current level.

As with Hungary, small-scale exports from the Czech Republic may be
taking place, grain that will need to be replaced, though wheat from the
Americas would be expected to cost around €170 once all transport costs
have been included.

During the 02/03 MY, the Polish government held stocks had been depleted
due to the Polish Agricultural Markets Agency selling wheat stocks to
raise capital to fund intervention on meat markets. Reduced production
combined with low stocks have created a deficit of at least 1 MMT of
wheat, though some in the trade argue for a figure closer to 1.7 or 1.8
MMT. The expected total grain import requirements for Poland in MY 03/04
could be as high as 2.5 MMT.

However, as prices are currently lower in Poland than in neighboring
countries, with domestic prices of feed wheat around \$150/MT (roughly
€130/MT). Currently, corn is \$140/MT, oats, \$130/MT and rye around
\$110. In addition there is still a 20% import tariff on grains, though
it is expected that the Polish government will probably introduce a
temporary tariff reduction or tariff quota. It is also within the realms
of possibility that a Polish export tax for grains could be introduced.
The source of the import requirements is difficult to assess, with North
and South America the most likely suppliers.

## Stocks

During the MY 02/03, wheat stocks rose by some 2 MMT to 13.2 MMT due to
the substantial domestic availability of wheat. The massive decrease in
grains in the EU during MY 03/04 will lead to a stock draw down,
currently estimated to be at least 4 MMT down to an ending stocks figure
of 8.7 MMT, though several countries report that the eventual ending
stocks could finish the MY at an even lower level. ONIC, the French
cereals agency, currently forecast the closing 03/04 French wheat stocks
at around 1.5 MMT. This would be at the lowest level since the late
1980's. In Germany, stocks are expected to be reduced by at least
900,000 MT to 2 MMT, though the final figure could well be lower.

Price expectations in France for wheat towards the end of the MY 03/04
are €180, followed by a sharp run down in price as the 2004 crop comes
on line in the summer of 2004, assuming normal conditions. This could
see a drop in the domestic wheat price back down to a more typical €110
level. Under these conditions, there is no advantage to holding stocks
so they are expected to be reduced.

In both the UK and Belgium, stock levels in the summer of 2003 were at
high levels, and are expected to be reduced. Belgian stocks in July 2003
were reported to be around 0.75 MMT, around 0.5 MMT more than the usual
level. Italian stocks were also reported to be at high levels due to
imports of Black Sea wheat exceeding feed requirements during the first
half of 2003.

# Barley

**PSD -- Barley -- EU-15**

  --------------- ------------ ---------- ---------- ---------- ---------- ---------- ---------
  **Country**     **European                                                          
                  Union**                                                             

  **Commodity**   **Barley**                                    (1000                 
                                                                HA)(1000              
                                                                MT)                   

                  2001         Revised    2002       Estimate   2003       Forecast   UOM

                  USDA         Post       USDA       Post       USDA       Post       
                  Official     Estimate   Official   Estimate   Official   Estimate   
                  \[Old\]      \[New\]    \[Old\]    \[New\]    \[Old\]    \[New\]    

  **Market Year                07/2001               07/2002               07/2003    MM/YYYY
  Begin**                                                                             

  Area Harvested  10742        10798      10540      10604      10595      10720      (1000 HA)

  Beginning       8216         8216       9136       8820       10259      8013       (1000 MT)
  Stocks                                                                              

  Production      48090        48203      48023      48063      47000      46946      (1000 MT)

  TOTAL Mkt. Yr.  982          1095       800        778        350        530        (1000 MT)
  Imports                                                                             

  Oct-Sep Imports 973          1095       700        550        350        530        (1000 MT)

  Jul-Jun Import  47           84         0          14         0          20         (1000 MT)
  U.S.                                                                                

  TOTAL SUPPLY    57288        57514      57959      57661      57609      55489      (1000 MT)

  TOTAL Mkt. Yr.  3652         3661       5000       4820       3500       3757       (1000 MT)
  Exports                                                                             

  Jul-Jun Exports 3081         3661       5000       5000       3500       3757       (1000 MT)

  Feed Dom.       32300        32435      29830      31241      36000      32995      (1000 MT)
  Consumption                                                                         

  TOTAL Dom.      44500        45033      42700      44828      49600      46493      (1000 MT)
  Consumption                                                                         

  Ending Stocks   9136         8820       10259      8013       4509       5239       (1000 MT)

  TOTAL           57288        57514      57959      57661      57609      55489      (1000 MT)
  DISTRIBUTION                                                                        
  --------------- ------------ ---------- ---------- ---------- ---------- ---------- ---------

Overall, the EU barley crop declined by 2.3% to just under 47 MMT, with
below average harvests recorded in France, Austria and Germany not quite
offset by output increases in Spain and the Netherlands.

In France, the MY 03/04 crop was below average, after suffering some
winter kill, though in general was little affected by the summer
drought. Less malting barley is available, though significant quantities
of feed barley are.

In Germany, MY 03/04 barley output declined by around 350,000 MT
compared to MY 02/03, to 10.7 MMT, though quality was generally good.
Import levels are expected to remain stable as barley is expected to be
imported to address the feed grain deficit. The lower feed availability
will also lead to a stock draw down and reduced exports.

The Spanish barley crop of 8.7 MMT, some 400,000 MT more than in 02/03,
was due to more favorable growing conditions in the main barley growing
area. Feed use of barley is expected to rise substantially, up around
600,000 MT in MY 03/04 to 7.6 MMT, due to higher availability and
increased imports, mostly from the rest of the EU.

In Poland, a 14% production drop has lead to an estimated 350,000 MT
import needs during MY 03/04, though it is not clear where these may be
sourced from and they could be replaced in the feed mix by corn or rye

Hungarian exports are currently estimated at 50,000 MT, though this
figure could eventually rise by another 100,000 MT depending on the
evolution of the price differential with neighboring countries.

+------------------------+--------------+--------------+--------------+
| ##                     |              |              |              |
| #### Barley Production |              |              |              |
+------------------------+--------------+--------------+--------------+
| 1000 MT                | **01/02**    | **02/03**    | **03/04**    |
+------------------------+--------------+--------------+--------------+
| France                 | 9806         | 10990        | 9980         |
+------------------------+--------------+--------------+--------------+
| Germany                | 13495        | 10928        | 10683        |
+------------------------+--------------+--------------+--------------+
| United Kingdom         | 6660         | 6128         | 6470         |
+------------------------+--------------+--------------+--------------+
| Italy                  | 1126         | 1190         | 1078         |
+------------------------+--------------+--------------+--------------+
| Spain                  | 6245         | 8333         | 8700         |
+------------------------+--------------+--------------+--------------+
| Netherlands            | 387          | 315          | 372          |
+------------------------+--------------+--------------+--------------+
| Austria                | 1010         | 850          | 869          |
+------------------------+--------------+--------------+--------------+
| Belgium-Luxembourg     | 405          | 396          | 320          |
+------------------------+--------------+--------------+--------------+
| Denmark                | 4068         | 4078         | 3710         |
+------------------------+--------------+--------------+--------------+
| Finland                | 1792         | 1566         | 1650         |
+------------------------+--------------+--------------+--------------+
| Greece                 | 380          | 432          | 430          |
+------------------------+--------------+--------------+--------------+
| Ireland                | 1184         | 963          | 1162         |
+------------------------+--------------+--------------+--------------+
| Portugal               | 12           | 22           | 12           |
+------------------------+--------------+--------------+--------------+
| Sweden                 | 1633         | 1872         | 1510         |
+------------------------+--------------+--------------+--------------+
| **EU15 Total**         | **48,203**   | **48,063**   | **46,946**   |
+------------------------+--------------+--------------+--------------+
| Cyprus                 |              |              | 100          |
+------------------------+--------------+--------------+--------------+
| Czech R.               |              |              | 2070         |
+------------------------+--------------+--------------+--------------+
| Estonia                |              |              | 250          |
+------------------------+--------------+--------------+--------------+
| Hungary                |              |              | 830          |
+------------------------+--------------+--------------+--------------+
| Latvia                 |              |              | 225          |
+------------------------+--------------+--------------+--------------+
| Lithuania              |              |              | 800          |
+------------------------+--------------+--------------+--------------+
| Malta                  |              |              | 5            |
+------------------------+--------------+--------------+--------------+
| Poland                 |              |              | 2830         |
+------------------------+--------------+--------------+--------------+
| Slovakia               |              |              | 800          |
+------------------------+--------------+--------------+--------------+
| Slovenia               |              |              | 33           |
+------------------------+--------------+--------------+--------------+
| **NMS 10 total**       |              |              | **7,943**    |
+------------------------+--------------+--------------+--------------+
| **EU-25 Total**        |              |              | **54889**    |
+------------------------+--------------+--------------+--------------+

Source: FAS EU Posts.

**Estimated Barley Balances for NMS-10 and EU-25 for 2003/04**

  -------------------------- -------------- -------------- --------------
  **2003/2004**              **NMS 10**     **EU-15**      **EU-25**

  Area                       2816           10720          13536

  Beginning Stocks           943            8013           8956

  Production                 7943           46946          54889

  MY Imports                 850            530            1120

  Jul-Jun Import U.S.        0              20             20

  **Total Supply**           **9736**       **55489**      **64965**

  MY Exports                 200            3757           3697

  Dom Consumption            6425           32995          39420

  Feed                       8715           46493          55208

  Ending Stocks              821            5239           6060

  **Tot Distribution**       **9736**       **55489**      **64965**
  -------------------------- -------------- -------------- --------------

# Corn

**PSD -- Corn -- EU-15**

  --------------- ------------ ---------- ---------- ---------- ---------- ---------- ---------
  **Country**     **European                                                          
                  Union**                                                             

  **Commodity**   **Corn**                                      (1000                 
                                                                HA)(1000              
                                                                MT)                   

                  2001         Revised    2002       Estimate   2003       Forecast   UOM

                  USDA         Post       USDA       Post       USDA       Post       
                  Official     Estimate   Official   Estimate   Official   Estimate   
                  \[Old\]      \[New\]    \[Old\]    \[New\]    \[Old\]    \[New\]    

  **Market Year                10/2001               10/2002               10/2003    MM/YYYY
  Begin**                                                                             

  Area Harvested  4462         4446       4352       4284       4135       4150       (1000 HA)

  Beginning       3743         3743       4192       3391       4881       3838       (1000 MT)
  Stocks                                                                              

  Production      40006        39636      40089      38545      30500      30196      (1000 MT)

  TOTAL Mkt. Yr.  2906         2402       3000       3039       4000       5355       (1000 MT)
  Imports                                                                             

  Oct Sep Imports 2906         2402       3000       3039       4000       5355       (1000 MT)

  Oct Sep Import  55           36         0          22         0          19         (1000 MT)
  U.S.                                                                                

  TOTAL SUPPLY    46655        45781      47281      44975      39381      39389      (1000 MT)

  TOTAL Mkt. Yr.  63           66         200        78         100        79         (1000 MT)
  Exports                                                                             

  Oct Sep Exports 63           66         200        78         100        79         (1000 MT)

  Feed Dom.       32800        32640      32600      31195      26500      28000      (1000 MT)
  Consumption                                                                         

  TOTAL Dom.      42400        42324      42200      41059      36100      37284      (1000 MT)
  Consumption                                                                         

  Ending Stocks   4192         3391       4881       3838       3181       2026       (1000 MT)

  TOTAL           46655        45781      47281      44975      39381      39389      (1000 MT)
  DISTRIBUTION                                                                        
  --------------- ------------ ---------- ---------- ---------- ---------- ---------- ---------

The hot, dry summer across much of Europe impacted heavily on corn
production, with output falling to 30.2 MMT in MY 03/04, a decline of
over 8 MMT year on year. Although, the summer weather conditions only
had a marginal impact on the 03/04 Spanish corn harvest.

The corn harvest in France fell substantially, to 11 MT in MY 03/04.
Over 200,000 ha. of corn was cut as silage during the summer of 2003.
The poor harvest will lead to a reduction in feed use and lower levels
of exports. The French ending stocks for 02/03 were zero. Old crop had
been fully used up as the new crop started to arrive several months
early due to the exceptional weather.

While official German corn production numbers are still at 3.4/3.5 MMT,
production is pegged at 2.5 MMT due to the severe damage from the
drought and some corn being cut as forage/silage.

Italy has a corn deficit. In the PSD, it is assumed that Italy will
import 700,000 MT from intra-EU sources and the same quantity from
extra-EU sources, however, it is far from certain that these quantities
will be imported. In particular, there are doubts as to whether non-GM
corn can be imported from Brazil. As some 60% of the feed ration is corn
there also remains scope for replacement with other feed. During 02/03,
there was a decline in Italian feed consumption of corn due to it's
replacement with feed wheat from the Black Sea region. In addition,
demand declined due to an 11% drop in poultry numbers.

Spain's import requirements for corn over MY 03/04 are predicted to be
2.25 MMT, of which 1.5 or 1.6 MMT will be under the abatement system.
The shortage of French corn this year will encourage imports from South
America at full duty. A shipment of Chinese corn has also been received
during the current marketing year. However, wet millers need GM free
corn, which is likely to be sourced from France, Brazil and some
certified GM free shipments from Argentina. The premium for non GM corn
over GM corn is around \$15 per MT. By the time testing and other higher
costs such as segregation are taken into account, GM free corn costs
around \$20 extra. In Spain, there are 37,000 hectares, or 8% of the
corn area, planted to Bt Corn. It is reported that farmers who have
planted GM corn are happy with the results so far.

With a UK import demand estimated to be almost 1.5 MMT during the 03/04
MY, it is felt that the demand is strong so could draw corn away from
other markets due to the general scarcity on intra-EU markets due to the
French drought.

Demand in the Netherlands for corn is significant, particularly from the
poultry sector, however, due to the scarcity of French corn, Argentina
and possibly China are being looked as likely sources. Argentine corn
has been imported before and the GM issue is not considered a problem as
most of the GM varieties used in Argentina have already been approved
for use in the EU. Likewise in Belgium, imports of Argentine corn are
expected to occur later during the year.

In Austria, the drought and consequent poor harvest have lead to a
domestic deficit of roughly 300,000 MT for the 03/04 MY. This is
expected to lead to up to 200,000 MT imports from the neighbors to the
east, if it can be found.

[New Member States]{.underline}

In Hungary, the area planted to corn continues to remain at a stable
level of 1.1 M ha., however, this year's crop was poor owing to adverse
weather with production at 4.6 MMT compared to levels of 7 MMT recorded
several years ago. Imports are negligible, apart from some hybrid seeds.
Exports are expected to be around 0.5 MMT. There remains, however, a
shortage of feed grains in Hungary and the government has been mulling
over an export ban (up to May 1^st^ 2004).

The western corn borer is a real problem in parts of Southern Hungary.
Crop rotation is an important tool to tackle this problem, however, some
family farms are unable to rotate due to economic pressures thus
exacerbating the problem. Hungary has adopted a conservative approach to
GM technology with little desire to risk the positive reputation of
Hungarian corn on EU markets.

In the Czech Republic, the area planted to corn continues to expand
rapidly, rising from 70,000 hectares in 2002/03 to 78,000 hectares in
2003/04. Bt corn has been approved for field trials as well as having
been approved for release onto the Czech market. It is likely that
approval for plantings will be granted in three years on conclusion of
the field trials.

Polish production remained more or less unchanged from 02/03 at 1.9 MT,
though area planted in 03/04 had risen and yields fallen due to the
drought. Polish corn production has also been rapidly increasing over
previous years, as with the Czech Republic.

There is still significant demand for feed corn on polish markets during
MY 03/04, with an estimated import requirement of 350 to 450,000 MT. It
is, however, not at all clear where these requirements can be sourced
from if at all. If corn is unavailable then estimates of imports of
other feed grains will need to be raised accordingly. The overall feed
grain import requirement is currently estimated at 1.5 MMT for MY 03/04.
As BT Corn is the only GM variety approved in Poland, this will restrict
the range of countries Poland is able to import corn from.

+------------------------+--------------+--------------+--------------+
| ###### Corn Production |              |              |              |
+------------------------+--------------+--------------+--------------+
| 1000 MT                | **01/02**    | **02/03**    | **03/04**    |
+------------------------+--------------+--------------+--------------+
| France                 | 16746        | 16100        | 11000        |
+------------------------+--------------+--------------+--------------+
| Germany                | 3505         | 3738         | 2500         |
+------------------------+--------------+--------------+--------------+
| United Kingdom         | 0            | 0            | 0            |
+------------------------+--------------+--------------+--------------+
| Italy                  | 10554        | 10200        | 8100         |
+------------------------+--------------+--------------+--------------+
| Spain                  | 4957         | 4463         | 4300         |
+------------------------+--------------+--------------+--------------+
| Netherlands            | 209          | 182          | 200          |
+------------------------+--------------+--------------+--------------+
| Austria                | 1489         | 1658         | 1376         |
+------------------------+--------------+--------------+--------------+
| Belgium-Luxembourg     | 464          | 515          | 514          |
+------------------------+--------------+--------------+--------------+
| Denmark                | 0            | 0            | 0            |
+------------------------+--------------+--------------+--------------+
| Finland                | 0            | 0            | 0            |
+------------------------+--------------+--------------+--------------+
| Greece                 | 820          | 840          | 1300         |
+------------------------+--------------+--------------+--------------+
| Ireland                | 0            | 0            | 0            |
+------------------------+--------------+--------------+--------------+
| Portugal               | 892          | 849          | 906          |
+------------------------+--------------+--------------+--------------+
| Sweden                 | 0            | 0            | 0            |
+------------------------+--------------+--------------+--------------+
| **EU15 Total**         | **39636**    | **38545**    | **30196**    |
+------------------------+--------------+--------------+--------------+
| Cyprus                 |              |              | 0            |
+------------------------+--------------+--------------+--------------+
| Czech R.               |              |              | 435          |
+------------------------+--------------+--------------+--------------+
| Estonia                |              |              | 0            |
+------------------------+--------------+--------------+--------------+
| Hungary                |              |              | 4600         |
+------------------------+--------------+--------------+--------------+
| Latvia                 |              |              | 0            |
+------------------------+--------------+--------------+--------------+
| Lithuania              |              |              | 0            |
+------------------------+--------------+--------------+--------------+
| Malta                  |              |              | 0            |
+------------------------+--------------+--------------+--------------+
| Poland                 |              |              | 1900         |
+------------------------+--------------+--------------+--------------+
| Slovakia               |              |              | 700          |
+------------------------+--------------+--------------+--------------+
| Slovenia               |              |              | 310          |
+------------------------+--------------+--------------+--------------+
| **NMS 10 total**       |              |              | **7945**     |
+------------------------+--------------+--------------+--------------+
| **EU-25 Total**        |              |              | **38141**    |
+------------------------+--------------+--------------+--------------+

Source: FAS EU Posts.

**Estimated Corn Balance for NMS-10 and EU-25 for 2003/04**

  -------------------------- -------------- -------------- --------------
  **2003/2004**              **NMS 10**     **EU-15**      **EU-25**

  Area                       1713           4150           5863

  Beginning Stocks           1068           3838           4906

  Production                 7945           30196          38141

  MY Imports                 514            5355           5362

  Jul-Jun Import U.S.        1              19             20

  **Total Supply**           **9527**       **39389**      **48409**

  MY Exports                 505            79             77

  Dom Consumption            7368           28000          35368

  Feed                       8130           37284          45414

  Ending Stocks              892            2026           2918

  **Tot Distribution**       **9527**       **39389**      **48409**
  -------------------------- -------------- -------------- --------------

#  Rye

**PSD Table: EU-15, Rye**

  --------------- ------------ ------------- ---------- -------------- ---------- -------------- ---------
  **Country**     **European                                                                     
                  Union**                                                                        

  **Commodity**   **Rye**                                              (1000                     
                                                                       HA)(1000                  
                                                                       MT)                       

                  2001         **Revised**   2002       **Estimate**   2003       **Forecast**   UOM

                  USDA         **Post        USDA       **Post         USDA       **Post         
                  Official     Estimate      Official   Estimate       Official   Estimate       
                  \[Old\]      \[New\]**     \[Old\]    \[New\]**      \[Old\]    \[New\]**      

  **Market Year                **07/2001**              **07/2002**               **07/2003**    MM/YYYY
  Begin**                                                                                        

  Area Harvested  1217         1213          1072       1077           875        891            (1000 HA)

  Beginning       4599         4564          5862       5862           5688       5777           (1000 MT)
  Stocks                                                                                         

  Production      6256         6273          4718       4733           3250       3244           (1000 MT)

  TOTAL Mkt. Yr.  311          311           331        331            0          30             (1000 MT)
  Imports                                                                                        

  Jul-Jun Imports 309          300           350        350            0          25             (1000 MT)

  Jul-Jun Import  0            0             0          0              0          0              (1000 MT)
  U.S.                                                                                           

  TOTAL SUPPLY    11166        11148         10911      10926          8938       9051           (1000 MT)

  TOTAL Mkt. Yr.  711          711           698        695            500        340            (1000 MT)
  Exports                                                                                        

  Jul-Jun Exports 816          650           700        1200           500        1023           (1000 MT)

  Feed Dom.       2516         2522          2725       2623           2200       3551           (1000 MT)
  Consumption                                                                                    

  TOTAL Dom.      4593         4575          4525       4454           3950       5364           (1000 MT)
  Consumption                                                                                    

  Ending Stocks   5862         5862          5688       5777           4488       3347           (1000 MT)

  TOTAL           11166        11148         10911      10926          8938       9051           (1000 MT)
  DISTRIBUTION                                                                                   
  --------------- ------------ ------------- ---------- -------------- ---------- -------------- ---------

The MY 03/04 German rye harvest was of poor quality due to the high
temperatures during the summer. This has helped lead to a shortage of
milling rye in Germany. Commission policy currently precludes using
intervention stocks to be released for flour use.

German rye production has been declining steadily in anticipation of the
end of rye's eligibility for EU intervention. This means that rye would
no longer enjoy a guaranteed minimum price equal to the EU intervention
price. This policy change will be valid for the 2004/05 MY, however, no
change to German rye production is expected as area has already been
significantly reduced. The same (lack of ) impact is also expected in
Poland, partly because there is no practical alternative to rye
production in many rye producing areas.

German rye stocks are forecast to be at a level of 3.3 MMT at the end of
the 03/04 marketing year. The final figure will depend on the
Commission's willingness to subsidize the transport of rye to Spain. At
the moment, it seems unlikely that the Commission will propose this
measure, however, should a change be made then the final stock figure
would end up lower (with a corresponding increase in German intra-EU
exports and a rise in Spanish rye feed consumption).

In Spain, the price of rye is currently around €159, compared to
€177/180 for feed wheat. At these levels, rye is not competitive for
feed use, though should the price fall a little then rye use will
increase. In 1995, Spain took over 1 MMT of rye from German intervention
stocks. However, as no transport subsidy for rye currently stored in
Germany is foreseen, imports are estimated to be 700,000 MT, though the
rye price would need to fall slightly relative to other feed grains to
achieve this level.

The Polish rye area is stable, with little change expected next year
either. There could be some imports of rye during MY 03/04 in Poland,
though the current low domestic price of \$110/MT and a 20% import
tariff make that appear unlikely under current conditions.

# Sorghum

**PSD Table: EU-15, Sorghum**

+------------+-------+-------+-------+-------+-------+-------+-------+
| *          | **Eur |       |       |       |       |       |       |
| *Country** | opean |       |       |       |       |       |       |
|            | Un    |       |       |       |       |       |       |
|            | ion** |       |       |       |       |       |       |
+------------+-------+-------+-------+-------+-------+-------+-------+
| **C        | ####  |       |       |       | (1000 |       |       |
| ommodity** | ## So |       |       |       | HA)   |       |       |
|            | rghum |       |       |       | (1000 |       |       |
|            |       |       |       |       | MT)   |       |       |
+------------+-------+-------+-------+-------+-------+-------+-------+
|            | 2001  | *     | 2002  | **    | 2003  | **    | UOM   |
|            |       | *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   |       | *     |       | *     |       | *     | MM    |
| Year       |       | *07/2 |       | *07/2 |       | *07/2 | /YYYY |
| Begin**    |       | 001** |       | 002** |       | 003** |       |
+------------+-------+-------+-------+-------+-------+-------+-------+
| Area       | 109   | 110   | 112   | 113   | 100   | 100   | (1000 |
| Harvested  |       |       |       |       |       |       | HA)   |
+------------+-------+-------+-------+-------+-------+-------+-------+
| Beginning  | 27    | 37    | 40    | 24    | 39    | 58    | (1000 |
| Stocks     |       |       |       |       |       |       | MT)   |
+------------+-------+-------+-------+-------+-------+-------+-------+
| Production | 653   | 658   | 701   | 707   | 400   | 454   | (1000 |
|            |       |       |       |       |       |       | MT)   |
+------------+-------+-------+-------+-------+-------+-------+-------+
| TOTAL Mkt. | 42    | 39    | 16    | 209   | 700   | 1159  | (1000 |
| Yr.        |       |       |       |       |       |       | MT)   |
| Imports    |       |       |       |       |       |       |       |
+------------+-------+-------+-------+-------+-------+-------+-------+
| Oct-Sep    | 41    | 41    | 400   | 209   | 300   | 1150  | (1000 |
| Imports    |       |       |       |       |       |       | MT)   |
+------------+-------+-------+-------+-------+-------+-------+-------+
| Oct-Sep    | 9     | 9     | 0     | 149   | 0     | 966   | (1000 |
| Import     |       |       |       |       |       |       | MT)   |
| U.S.       |       |       |       |       |       |       |       |
+------------+-------+-------+-------+-------+-------+-------+-------+
| TOTAL      | 722   | 734   | 757   | 940   | 1139  | 1671  | (1000 |
| SUPPLY     |       |       |       |       |       |       | MT)   |
+------------+-------+-------+-------+-------+-------+-------+-------+
| TOTAL Mkt. | 3     | 3     | 15    | 2     | 15    | 3     | (1000 |
| Yr.        |       |       |       |       |       |       | MT)   |
| Exports    |       |       |       |       |       |       |       |
+------------+-------+-------+-------+-------+-------+-------+-------+
| Oct-Sep    | 3     | 2     | 15    | 5     | 15    | 13    | (1000 |
| Exports    |       |       |       |       |       |       | MT)   |
+------------+-------+-------+-------+-------+-------+-------+-------+
| Feed Dom.  | 677   | 679   | 661   | 869   | 1075  | 1608  | (1000 |
| C          |       |       |       |       |       |       | MT)   |
| onsumption |       |       |       |       |       |       |       |
+------------+-------+-------+-------+-------+-------+-------+-------+
| TOTAL Dom. | 679   | 707   | 703   | 880   | 1100  | 1642  | (1000 |
| C          |       |       |       |       |       |       | MT)   |
| onsumption |       |       |       |       |       |       |       |
+------------+-------+-------+-------+-------+-------+-------+-------+
| Ending     | 40    | 24    | 39    | 58    | 24    | 26    | (1000 |
| Stocks     |       |       |       |       |       |       | MT)   |
+------------+-------+-------+-------+-------+-------+-------+-------+
| TOTAL      | 722   | 734   | 757   | 940   | 1139  | 1671  | (1000 |
| DI         |       |       |       |       |       |       | MT)   |
| STRIBUTION |       |       |       |       |       |       |       |
+------------+-------+-------+-------+-------+-------+-------+-------+

It is expected that slightly over 1 MMT of sorghum will be imported into
the EU during MY 03/04. Spain is forecast to import around 700,000 MT,
of which 300,000 MT has already been imported. Most if these quantities
are expected from the U.S., with some from Brazil. Argentine sorghum has
been ignored by importers as the tannin content is considered too high,
despite being priced \$18 lower than other origins. Italy is estimated
to import 300,000 MT of sorghum during the MY 03/04. A shipment of
30,000 MT is also reported to be scheduled for mid December arrival in
Portugal, amongst an expected 100,000 MT imports during MY 03/04.

# Oats

**PSD Table: EU-15, Oats**

+------------+-------+-------+-------+-------+-------+-------+-------+
| *          | **Eur |       |       |       |       |       |       |
| *Country** | opean |       |       |       |       |       |       |
|            | Un    |       |       |       |       |       |       |
|            | ion** |       |       |       |       |       |       |
+------------+-------+-------+-------+-------+-------+-------+-------+
| **C        | #     |       |       |       | (1000 |       |       |
| ommodity** | ##### |       |       |       | HA)   |       |       |
|            |  Oats |       |       |       | (1000 |       |       |
|            |       |       |       |       | MT)   |       |       |
+------------+-------+-------+-------+-------+-------+-------+-------+
|            | 2001  | *     | 2002  | **    | 2003  | **    | UOM   |
|            |       | *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   |       | *     |       | *     |       | *     | MM    |
| Year       |       | *07/2 |       | *07/2 |       | *07/2 | /YYYY |
| Begin**    |       | 001** |       | 002** |       | 003** |       |
+------------+-------+-------+-------+-------+-------+-------+-------+
| Area       | 1959  | 1953  | 2103  | 2103  | 2100  | 2110  | (1000 |
| Harvested  |       |       |       |       |       |       | HA)   |
+------------+-------+-------+-------+-------+-------+-------+-------+
| Beginning  | 784   | 729   | 820   | 759   | 808   | 816   | (1000 |
| Stocks     |       |       |       |       |       |       | MT)   |
+------------+-------+-------+-------+-------+-------+-------+-------+
| Production | 6207  | 6199  | 7228  | 7258  | 6850  | 6737  | (1000 |
|            |       |       |       |       |       |       | MT)   |
+------------+-------+-------+-------+-------+-------+-------+-------+
| TOTAL Mkt. | 1     | 3     | 10    | 1     | 10    | 3     | (1000 |
| Yr.        |       |       |       |       |       |       | MT)   |
| Imports    |       |       |       |       |       |       |       |
+------------+-------+-------+-------+-------+-------+-------+-------+
| Oct-Sep    | 0     | 0     | 10    | 5     | 10    | 3     | (1000 |
| Imports    |       |       |       |       |       |       | MT)   |
+------------+-------+-------+-------+-------+-------+-------+-------+
| Oct-Sep    | 1     | 0     | 0     | 2     | 0     | 0     | (1000 |
| Import     |       |       |       |       |       |       | MT)   |
| U.S.       |       |       |       |       |       |       |       |
+------------+-------+-------+-------+-------+-------+-------+-------+
| TOTAL      | 6992  | 6931  | 8058  | 8018  | 7668  | 7556  | (1000 |
| SUPPLY     |       |       |       |       |       |       | MT)   |
+------------+-------+-------+-------+-------+-------+-------+-------+
| TOTAL Mkt. | 613   | 579   | 900   | 939   | 400   | 499   | (1000 |
| Yr.        |       |       |       |       |       |       | MT)   |
| Exports    |       |       |       |       |       |       |       |
+------------+-------+-------+-------+-------+-------+-------+-------+
| Oct-Sep    | 703   | 562   | 900   | 810   | 400   | 499   | (1000 |
| Exports    |       |       |       |       |       |       | MT)   |
+------------+-------+-------+-------+-------+-------+-------+-------+
| Feed Dom.  | 4347  | 4338  | 5100  | 4955  | 5250  | 5000  | (1000 |
| C          |       |       |       |       |       |       | MT)   |
| onsumption |       |       |       |       |       |       |       |
+------------+-------+-------+-------+-------+-------+-------+-------+
| TOTAL Dom. | 5559  | 5593  | 6350  | 6263  | 6500  | 6310  | (1000 |
| C          |       |       |       |       |       |       | MT)   |
| onsumption |       |       |       |       |       |       |       |
+------------+-------+-------+-------+-------+-------+-------+-------+
| Ending     | 820   | 759   | 808   | 816   | 768   | 747   | (1000 |
| Stocks     |       |       |       |       |       |       | MT)   |
+------------+-------+-------+-------+-------+-------+-------+-------+
| TOTAL      | 6992  | 6931  | 8058  | 8018  | 7668  | 7556  | (1000 |
| DI         |       |       |       |       |       |       | MT)   |
| STRIBUTION |       |       |       |       |       |       |       |
+------------+-------+-------+-------+-------+-------+-------+-------+

In Germany, oats production grew to 1.190 MMT in MY 03/04 as some grain
area affected by winterkill was resown as spring oats thus increasing
overall area sown to oats. The quality of German production in 03/04 was
very good, meaning that there is no need for the typical high quality
oat imports this year, thus lowering Germany's import requirements.

The Czech Republic saw the highest oats production for three years due
to winterkill area resown as oats. For the forthcoming year, 2004/05,
production is expected to decline.

In Spain, an increased feed consumption of oats is expected as this is
currently the cheapest grain available, particularly with Finnish prices
being depressed due to the abundant harvest there this year.

In Poland, the long-term trend of declining oats production continued
with a 12% year on year production fall. Oats production is generally
concentrated on smaller farms and yields show a high degree of
vulnerability to adverse weather.

# Mixed Grain

**PSD Table: EU-15, Mixed Grain**

+------------+-------+-------+-------+-------+-------+-------+-------+
| *          | **Eur |       |       |       |       |       |       |
| *Country** | opean |       |       |       |       |       |       |
|            | Un    |       |       |       |       |       |       |
|            | ion** |       |       |       |       |       |       |
+------------+-------+-------+-------+-------+-------+-------+-------+
| **C        | ###   |       |       |       | (1000 |       |       |
| ommodity** | ### M |       |       |       | HA)   |       |       |
|            | ixed  |       |       |       | (1000 |       |       |
|            | Grain |       |       |       | MT)   |       |       |
+------------+-------+-------+-------+-------+-------+-------+-------+
|            | 2001  | *     | 2002  | **    | 2003  | **    | UOM   |
|            |       | *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   |       | *     |       | *     |       | *     | MM    |
| Year       |       | *07/2 |       | *07/2 |       | *07/2 | /YYYY |
| Begin**    |       | 001** |       | 002** |       | 003** |       |
+------------+-------+-------+-------+-------+-------+-------+-------+
| Area       | 1029  | 1030  | 1079  | 1074  | 1055  | 1054  | (1000 |
| Harvested  |       |       |       |       |       |       | HA)   |
+------------+-------+-------+-------+-------+-------+-------+-------+
| Beginning  | 0     | 304   | 0     | 290   | 0     | 269   | (1000 |
| Stocks     |       |       |       |       |       |       | MT)   |
+------------+-------+-------+-------+-------+-------+-------+-------+
| Production | 5550  | 5551  | 5610  | 5601  | 4950  | 4960  | (1000 |
|            |       |       |       |       |       |       | MT)   |
+------------+-------+-------+-------+-------+-------+-------+-------+
| TOTAL Mkt. | 0     | 0     | 0     | 0     | 0     | 0     | (1000 |
| Yr.        |       |       |       |       |       |       | MT)   |
| Imports    |       |       |       |       |       |       |       |
+------------+-------+-------+-------+-------+-------+-------+-------+
| Oct-Sep    | 0     | 0     | 0     | 0     | 0     | 0     | (1000 |
| Imports    |       |       |       |       |       |       | MT)   |
+------------+-------+-------+-------+-------+-------+-------+-------+
| Oct-Sep    | 0     | 0     | 0     | 0     | 0     | 0     | (1000 |
| Import     |       |       |       |       |       |       | MT)   |
| U.S.       |       |       |       |       |       |       |       |
+------------+-------+-------+-------+-------+-------+-------+-------+
| TOTAL      | 5550  | 5855  | 5610  | 5891  | 4950  | 5229  | (1000 |
| SUPPLY     |       |       |       |       |       |       | MT)   |
+------------+-------+-------+-------+-------+-------+-------+-------+
| TOTAL Mkt. | 0     | 0     | 0     | 0     | 0     | 0     | (1000 |
| Yr.        |       |       |       |       |       |       | MT)   |
| Exports    |       |       |       |       |       |       |       |
+------------+-------+-------+-------+-------+-------+-------+-------+
| Oct-Sep    | 0     | 0     | 0     | 233   | 0     | 0     | (1000 |
| Exports    |       |       |       |       |       |       | MT)   |
+------------+-------+-------+-------+-------+-------+-------+-------+
| Feed Dom.  | 5300  | 5199  | 5360  | 5258  | 4750  | 4786  | (1000 |
| C          |       |       |       |       |       |       | MT)   |
| onsumption |       |       |       |       |       |       |       |
+------------+-------+-------+-------+-------+-------+-------+-------+
| TOTAL Dom. | 5550  | 5565  | 5610  | 5622  | 4950  | 5043  | (1000 |
| C          |       |       |       |       |       |       | MT)   |
| onsumption |       |       |       |       |       |       |       |
+------------+-------+-------+-------+-------+-------+-------+-------+
| Ending     | 0     | 290   | 0     | 269   | 0     | 186   | (1000 |
| Stocks     |       |       |       |       |       |       | MT)   |
+------------+-------+-------+-------+-------+-------+-------+-------+
| TOTAL      | 5550  | 5855  | 5610  | 5891  | 4950  | 5229  | (1000 |
| DI         |       |       |       |       |       |       | MT)   |
| STRIBUTION |       |       |       |       |       |       |       |
+------------+-------+-------+-------+-------+-------+-------+-------+

# Rice

  ------------------- ------------ ---------- ---------- ---------- ---------- ---------- ---------
  **Country**         **European                                                          
                      Union**                                                             

  **Commodity**       **Rice,                                       (1000                 
                      Milled**                                      HA)(1000              
                                                                    MT)                   

                      2001         Revised    2002       Estimate   2003       Forecast   UOM

                      USDA         Post       USDA       Post       USDA       Post       
                      Official     Estimate   Official   Estimate   Official   Estimate   
                      \[Old\]      \[New\]    \[Old\]    \[New\]    \[Old\]    \[New\]    

  **Market Year                    09/2001               09/2002               09/2003    MM/YYYY
  Begin**                                                                                 

  Area Harvested      396          398        397        396        400        403        (1000 HA)

  Beginning Stocks    888          605        880        692        761        810        (1000 MT)

  Milled Production   1624         1635       1706       1716       1625       1675       (1000 MT)

  Rough Production    2566         2620       2624       2610       2500       2551       (1000 MT)

  MILLING RATE        6328         6241       6501       6575       6501       6567       (1000 MT)
  (.9999)                                                                                 

  TOTAL Imports       918          790        885        926        900        885        (1000 MT)

  Jan-Dec Imports     959          920        900        850        875        1070       (1000 MT)

  Jan-Dec Import U.S. 0            274        0          166        0          191        (1000 MT)

  TOTAL SUPPLY        3430         3030       3471       3334       3286       3370       (1000 MT)

  TOTAL Exports       335          306        485        313        450        343        (1000 MT)

  Jan-Dec Exports     358          258        475        470        475        343        (1000 MT)

  TOTAL Dom.          2215         2032       2225       2211       2230       2201       (1000 MT)
  Consumption                                                                             

  Ending Stocks       880          692        761        810        606        826        (1000 MT)

  TOTAL DISTRIBUTION  3430         3030       3471       3334       3286       3370       (1000 MT)
  ------------------- ------------ ---------- ---------- ---------- ---------- ---------- ---------

In 2003/04, Italian rice production was reduced by the drought. Area
planted to rice was unchanged at 120,000 hectares and remains within the
MGA permitted by the EU. Rough rice production was around the same as
last year, but the milling rate fell to 0.5728.

Italian domestic consumption levels are expected to remain unchanged
over the coming marketing year, 03/04, with stock levels remaining high
and perhaps 20 to 30,000 MT of rice being used as animal feed. For the
forthcoming 04/05 season, plantings of indica varieties are expected to
decline slightly. AT the end of the 02/03 campaign, there were 638,000
MT in EU intervention stores, of which 234,000 MT were in Italy.

In Spain, for 03/04 a good crop is expected, with yields exceeding 8
MT/ha. The maximum guaranteed area (MGA) permitted under EU rules in
Spain is 104,000 hectares. This year, Spanish rice area will exceed
117,000 hectares, leading to significant penalties, with direct payments
reduced to 30% of their normal level. Despite this, rice production
remains a very profitable enterprise in Spain. Planting intentions for
next year, 2004/05, would suggest that there will be no change to the
area planted to rice in Spain. Over the past decade, significant
investments have been made to the Spanish rice sector, with for example,
yields improving by over 50% over the past seven years.

Currently, prices in Spain are falling, but overall changes are minimal
due to high international prices. Stock levels are stable, all of which
is long grain rice. Spanish producers are reported to be concerned about
basmati rice imports, as they feel that it competes with Spanish long
grain rice. They have also expressed concerns about competition from
rice imports from the Least Developed Countries (LDCs, who will get zero
duty access to EU markets from 2009 under the Everything But Arms
package).

Hungary's is undergoing long term decline in rice production from an
planted area of 20,000 hectares a few years ago to 7,000 hectares
currently.

In Germany, rice consumption is stable, though basmati has risen to 15%
of the market, replacing Italian round grain rice.

**EU --15 Basmati rice imports**

  ----------------- ----------------- ----------------- -----------------
                    **2000/01**       **2001/02**       **2002/03**

  India             143,696           165,151           181,605

  Pakistan          61,730            49,606            94,771

  Total             205,426           214,757           276,377
  ----------------- ----------------- ----------------- -----------------

Source: European Commission, MY Sept to Aug.

# EU feed grain for 2003/04

The decline in feed grain availability in the EU during the 03/04 MY is
reflected in the drop grain use for feed from 123.2 MMT in 02/03 to
118.1 MMT. Increased imports of NGFI such as tapioca, as well as
increased use of oilseed meals should help to offset the reduction,
though the table also serves to reflect the tightness in EU grain
balances this season.

Feed use in the Netherlands is estimated to fall from 3.2 MMT in 02/03
to 2.8 MMT in 03/04. The shortfall being made up by increased use of
NGFI such as tapioca.

For the New Member States, Poland has an estimated 2.5 MMT grain
shortfall, Hungary and the Czech Republic both have extremely tight
balance sheets with some need for imports and a risk of seeing current
domestic supplies literally evaporate out of the country 'truck by
truck'.

**EU Production of Wheat and Coarse Grains, MY 01/02 to 03/04.**

  ----------------- ----------------- ----------------- -----------------
  **Millions MT**   **Wheat**         **Coarse Grains** **All Grains**

  **MY 01/02**      90.8              106.5             197.3

  **MY 02/03**      103.7             104.9             208.6

  **MY 03/04**      91.6              92.5              184.2
  ----------------- ----------------- ----------------- -----------------

**EU-15 Consumption of feed grains, 2002/03 and 2003/04 compared**

  ------------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ------------
                Wheat                   **Corn**                **Other                 **Total**               **Change**
                                                                Coarse                                          
                                                                Grains**                                        

                **02/03**   **03/04**   **02/03**   **03/04**   **02/03**   **03/04**   **02/03**   **03/04**   

  **France**    12200       11810       6100        3000        5830        5639        24130       20449       -3681

  **Germany**   9000        9455        2850        2200        12308       12508       24158       24163       5

  **UK**        6876        6619        367         334         3662        3830        10905       10783       -122

  **Italy**     2100        1600        9420        9300        2218        2415        13738       13315       -423

  **Spain**     6522        4550        6193        6430        8439        10238       21154       21448       294

  **Other EU**  10557       9450        6275        6074        12309       12388       29141       27923       -1218

  **EU Total**  47255       43484       31205       27338       44766       47259       123226      118081      -5145
  ------------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ------------

Source: FAS Post Estimates

This table indicates that there is 5 MMT less feed grain available in
the EU this year compared to last year. Whether this shortage is in
France, or reduced French intra-European exports effectively pass the
problem to another country will be clearer as the MY develops.

# Planting Outlook for 2004/05

+------------+---------------------------------------------------------+
| EU         | The European Commission has announced measures to       |
|            | reduce the compulsory set-aside area for 2004/05 from   |
|            | 10% to 5%. While the announcement was to alter many     |
|            | winter planting decisions, it may have some impact on   |
|            | spring plantings. As some set-aside area is used for    |
|            | oilseeds production, which as contracts will already    |
|            | have been signed will not be affected by this decision, |
|            | and small farms do not have to set-aside land, the      |
|            | overall impact on production is expected to be an       |
|            | increase in EU grain production for 04/05 of 5 to 7     |
|            | MMT.                                                    |
+------------+---------------------------------------------------------+
| France     | Area planted to wheat in 04/05 is expected to rise by 2 |
|            | to 3% to 5.2-5.3 m ha. Early corn harvests in 2003      |
|            | enabled fields to be prepared for winter wheat planting |
|            | which is not normally the case. However, due to the     |
|            | still depleted water levels, there exists a risk to the |
|            | 04/05 crop should dry conditions persist. Wheat often   |
|            | presents a lower risk crop than corn in areas where     |
|            | irrigation is not available due to its lower            |
|            | sensitivity to drought.                                 |
|            |                                                         |
|            | For barley, little change to area planted is expected   |
|            | in 04/05.                                               |
+------------+---------------------------------------------------------+
| Germany    | For 04/05, the area planted to wheat is expected to     |
|            | increase by 2%, with an increased percentage of winter  |
|            | wheat. The set-aside change came too late to impact on  |
|            | winter wheat plantings, though there may be some        |
|            | increase in spring wheat plantings                      |
|            |                                                         |
|            | For 04/05, the total area planted to barley is expected |
|            | to remain static, though with less spring and more      |
|            | winter barley, average yields should rise.              |
|            |                                                         |
|            | For the 04/05 year, area planted to corn is likely to   |
|            | stay above 400,000 hectares owing to the set-aside      |
|            | changes and because corn provides higher yields than    |
|            | other spring planted crops in Germany.                  |
|            |                                                         |
|            | For the 04/05 MY, the first after the abolition of      |
|            | intervention for rye, there is not expected to be any   |
|            | change to the area planted to rye as the reduction has  |
|            | already taken place over the past couple of years in    |
|            | Germany. The south of Germany even has a small deficit  |
|            | for rye which could see rye plantings rise slightly in  |
|            | the South, which will at least offset most of the       |
|            | reduced area planted to rye in the North of Germany,    |
|            | with overall area unchanged or perhaps marginally       |
|            | reduced.                                                |
+------------+---------------------------------------------------------+
| United     | The set-aside announcement may have been early enough   |
| Kingdom    | for some farmers to have been able to change their      |
|            | planting decisions. An early estimate for the 2004/05   |
|            | wheat area would be a rise in area of 50 to 75k ha. to  |
|            | give a total of 2m ha. planted to wheat. Under average  |
|            | conditions, with a yield of 8.06 MT/ha. this would lead |
|            | to a crop around 16.1 MMT.                              |
|            |                                                         |
|            | An extra 50,000 hectares of spring barley is expected   |
|            | to be sown due to the set-aside rules change, leading   |
|            | to an extra 350,000 MT of barley in 04/05.              |
+------------+---------------------------------------------------------+
| Spain      | Wheat plantings are expected to increase significantly  |
|            | due to the price of sunflower seed being the same as    |
|            | feed wheat. Under these conditions farmers clearly      |
|            | prefer to plant wheat. With 60% of the winter wheat     |
|            | area currently sown, the set-aside change could lead to |
|            | an increase in wheat area, however, conditions are      |
|            | currently too wet for planting. However, as the rains   |
|            | have continued through November, the window for         |
|            | planting winter wheat is closing, with farmers thought  |
|            | likely to consider planting spring barley in January.   |
|            | Durum plantings are reported to be stable. However,     |
|            | should the wet conditions persist, then area planted to |
|            | barley will increase.                                   |
+------------+---------------------------------------------------------+
| N          | Increased winter wheat plantings expected.              |
| etherlands |                                                         |
+------------+---------------------------------------------------------+
| Austria    | Crops planted largely unchanged, but with increased     |
|            | corn area of 5 to 10%. Wheat area expected to remain    |
|            | circa 280,000 ha. It is expected that next year's area  |
|            | planted to corn will increase by 5 to 10% due to the    |
|            | change in set-aside rules.                              |
+------------+---------------------------------------------------------+
| Belgium-   | For 04/05, winter wheat seedings are predicted to be at |
| Luxembourg | around 230,000 ha., slightly higher than in a typical   |
|            | year. The announcement of the change to the set-aside   |
|            | rules came too late to impact on Autumn plantings       |
+------------+---------------------------------------------------------+
| Poland     | Winter plantings are expected to remain at similar      |
|            | levels to previous years, with 4.6 to 4.8 m ha. winter  |
|            | grains, of which 2m ha. would be wheat and 1.6 m ha.    |
|            | rye. Under the simplified payment scheme of the CAP,    |
|            | support for larger wheat producers will effectively     |
|            | fall next year, thus the introduction of the CAP is not |
|            | expected to impact on yields in the short term.         |
+------------+---------------------------------------------------------+
| Hungary    | With winter wheat plantings complete, the area is 4%    |
|            | higher than last year which under reasonable climatic   |
|            | conditions could lead to an 04/05 crop of 5.4 MMT. Over |
|            | the medium term the corn area is expected to increase,  |
|            | but for next year, it is unclear how farmers planting   |
|            | decisions will be influenced by the CAP.                |
|            |                                                         |
|            | For 04/05, it is not expected that there will be any    |
|            | significant changes to area planted to corn due to the  |
|            | impact of the EU's CAP, basically because the CAP is    |
|            | not widely understood, farmers are expected to maintain |
|            | the status quo until they better understand the policy. |
|            | However, it is possible that corn area could rise by up |
|            | to 10% for the 04/05 season. In the medium term, area   |
|            | planted to corn is expected to rise.                    |
+------------+---------------------------------------------------------+
| Czech      | Plantings of wheat are expected to rise, from this      |
| Republic   | years harvested area of 650,000 ha. towards 800,000 ha. |
+------------+---------------------------------------------------------+

# Policy

During the summer, as the extent of the production shortfall due to the
drought and heat wave became apparent, the European Commission stopped
granting export subsidies for wheat exports. Currently, the only grain
eligible for EU export subsidies is oats. This measure was designed to
stem the flow of exports of European grains.

In November, the European Commission adopted an amendment to the low and
medium wheat import quota system to enable the U.S. and Canada to use
the part of the quota previously reserved for other third countries. In
practice, Canadian exports were the beneficiary of this measure, as the
38,000 MT TRQ allocated to them was used up during the Autumn.

Additionally, in November, the European Commission announced it's
intention to lower the compulsory set-aside rate from 10% to 5% for the
2004/05 MY. The intention is to encourage additional grain production to
help replenish depleted reserves. Post estimates that EU-15 grain
production will increase by 5 to 7 MMT in 2004 due to this change.

In response to the shortage of grains on EU markets, the European
Commission has been slowly releasing intervention stocks for use as
animal feed over the course of the marketing year. It is expected that
remaining wheat stocks will be released by tender during the first six
months of 2004.

Further Commission responses to the current grain situation have been
the subject of much speculation. Under the current market situation,
Post expects the Commission to maintain its current cautious approach of
slowly releasing intervention stocks for domestic feed use. It is not
expected to implement more radical approaches such as the imposition of
an export tax or the subsidization of the transport costs for
intervention rye currently stored in Germany to be shipped to Spain.

In June, a package reforming the CAP was agreed which will have a major
impact on the way that subsidies are paid to farmers. Further details
can be found in GAIN Report E23121. However, little impact is expected
during the current year 2003/04 or the following year, 2004/05.

The rice sector will also undergo significant changes following this CAP
Reform, including a reduction of 50% in the EU rice intervention price.
A related change is the EU's current attempt to renegotiate the rice
margin of preference import tariff system.

**Visit our website:** our website
**[www.useu.be/agri/usda.html]{.underline}** provides a broad range of
useful information on EU import rules and agricultural policy and allows
easy access to USEU reports, trade information and other practical
information.

E-mail: <AgUSEUBrussels@usda.gov>

# Related USEU and European Post Reports:

**December 9, 2003 European Union** Trade Policy Monitoring [BT-11 Sweet
Corn Fails to Get EU
Approval](http://intranetapps/GainFiles/200312/146085341.pdf) E23234
*Voluntary Report - public distribution* Brussels USEU In the run up to
the December 8th vote on B-11 sweet corn, Commissioner of Health and
Consumer Protection David Byrne, the architect of the traceability and
labeling regulations, remarked \"If we fail to make progress \[on the
public\'s perception of the safety of biotech products\], there is a
very real danger that an anti-science agenda may take root in European
society leading to a society hampered and restricted by a collective
neurosis.\"

**December 8, 2003 European Union** Trade Policy Monitoring [\"Safe as
Conventional\" Corn](http://intranetapps/GainFiles/200312/146085333.pdf)
E23233 *Voluntary Report - public distribution* Brussels USEU On
December 4, 2000 the European Food Safety Authority (EFSA) announced a
positive risk assessment for the biotech variety NK603, a corn produced
by Monsanto. EFSA stated unequivocally that "The Panel has concluded
that the herbicide- tolerant GM maize NK603 is as safe as conventional
maize and therefore that the placing on the market---for import for
processing and food or feed use---is unlikely to have an adverse impact
on human or animal health, or in this context, on the environment."

**December 5, 2003 \| Spain** \| Grain and Feed \| [Heavy Rains Delay
Spanish Winter Grain
Planting](http://intranetapps/GainFiles/200312/146085324.pdf) \| SP3046
\| *Voluntary Report - public distribution* \| Madrid \| Heavy rains are
washing out the prospects for a big 2004 winter gain crop.
Castilla-Leon, the country\'s most important production area, has been
especially hard hit.

**December 4, 2003 Hungary** Grain and Feed [November Grain
Situation](http://intranetapps/GainFiles/200312/146085309.pdf) HU3014
*Voluntary Report - public distribution* Vienna Wheat prices are nearly
double last year, and spring futures indicate a further 25-30 %
increase. The wheat export surplus is 400,000 MT at most with half of
this volume already shipped to neighboring countries. The poor corn
harvest, at about 4.5 million MT, reduced export surpluses to 500,000
MT. Hungary may increase their rye and feed barley purchases from Europe
and overseas. The GOH issued a 100,000 MT duty-free import quota for
rye, barley, and oats and plans to issue a new quota of 150,000 MT for
2004.

**December 4, 2003 Portugal** Grain and Feed [Tight Supply Situation
Draws U.S. Grain into
Portugal](http://intranetapps/GainFiles/200312/146085302.pdf) PO3025
*Voluntary Report - public distribution* Madrid Faced with poor domestic
grain crops and tight supplies throughout Europe, Portuguese grain
traders are scrambling to find alternative supplies. One of these is
sorghum. Although sorghum has hardly been used in the past by the
Portuguese feed industry, traders have purchased U.S. sorghum to mix in
feed rations; some 27,000 tons are due to arrive shortly.

**December 1, 2003 Bosnia-Hercegovina** Grain and Feed [Grain and Feed
Update](http://intranetapps/GainFiles/200312/146085266.pdf) BK3014
*Voluntary Report - public distribution* Vienna Wheat and corn
production was drought affected with traditional suppliers (e.g.
Hungary, Croatia) having limited export supplies. At present, demand for
U.S. wheat is strong. USDA donation/monetization programs introduced HRW
wheat into the Bosnian market in 1997, and millers blend it with other
wheat available on the domestic market. Millers estimate a demand of
150,000 MT for HRW (12 percent protein) until the next harvest. The
demand for corn is also strong because of growing broilers and eggs
production. Imports are expected to reach 200,000 MT. GSM 102 is
available for different commodities through local banks.

**November 20, 2003 European Union** Grain and Feed [EU Commission
adopts regulation allowing US greater access to wheat
quotas](http://intranetapps/GainFiles/200311/146085175.pdf) E23221
*Voluntary Report - public distribution* Brussels USEU The European
Commission has adopted an amendment to the low and medium wheat import
quota system that enables the U.S. and Canada to use part of the quota
previously reserved for other third countries. Roughly 1.4 MMT of
additional quota for 2003 will now be available for these two
countries\' exports to the EU. November 24th is the earliest possible
date for bidding for quotas.

**November 19, 2003 Croatia** Grain and Feed [Grain and Feed Harvest and
Trade Update](http://intranetapps/GainFiles/200311/146085149.pdf) HR3022
*Voluntary Report - public distribution* Vienna The summer drought
reduced production of all major grains. Tight grain supplies mean there
will be no wheat or corn exports. The wheat export subsidy issue
shouldn\'t surface this year. Corn imports could reach 100,000 tons if
available from neighboring suppliers. This is an update to HR3017. No
PS&D is included as our understanding is that FAS doesn\'t maintain a
Croatian grain PS&D.

**November 7, 2003 Romania** Grain and Feed [Grain and Feed November
Update](http://intranetapps/GainFiles/200311/145986757.pdf) RO3019
*Voluntary Report - public distribution* Sofia FAS Bucharest further
revises down, from our July figures, production estimates for MY 2003/04
at only 2 MMT, of which about half is reportedly kept in reserve on-farm
and unlikely to reach the market. The U.S. have a real window of
opportunity for milling wheat sales to Romania, because this commodity
is scarce in the region and traditional sources are gradually exhausted.
Duties for milling wheat were lifted by the GOR through December 2003.
Moreover, a recent development is that the licensing system initially
adopted to monitor wheat imports was recently repealed and the
authorities are considering extending this trade action up to the new
crop, that is, May 31, 2004. A slightly below average corn production -
estimated by FAS Bucharest at about 6.5 million MT - combined with very
low feed wheat and barley inventories, boosted demand for corn and
raised domestic bids to unusual levels (\$150/MT, with an ascending
trend) for this time of the year

**November 6, 2003 European Union** Agricultural Situation [EU to reduce
set-aside rate to 5% for
2004/05](http://intranetapps/GainFiles/200311/145986735.pdf) E23208
*Voluntary Report - public distribution* Brussels USEU European
Agriculture Commissioner has announced his intention to lower the
compulsory set-aside rate from the current 10% to 5% for the 2004/05
marketing year. This move is in response to the poor harvest this year.
The European Commission estimate that this will lead to an increase in
production of cereals in the EU by 7 million metric tonnes next year.
The Commission is expected to set to table proposals for this change
next week, though formal approval may not be completed until early in
2004.

**November 5, 2003 European Union** Grain and Feed [EU Commission to
allow US to access larger wheat import quotas for
2003](http://intranetapps/GainFiles/200311/145986714.pdf) E23207
*Voluntary Report - public distribution* Brussels USEU The European
Commission has proposed an amendment to the low and medium wheat import
quota system that would enable the U.S. and Canada to use the part of
the quota previously reserved for \'other countries\' (i.e. all but U.S.
and Canada). Roughly 1.4 MMT of additional quota for 2003 will now be
available for these two countries exports to the EU. The Regulation
enters into force the day after publication, which is expected next
week, with Monday the 17th as a possible first date for bidding for
quotas.

**September 23, 2003 Spain** Grain and Feed [Spain Grain
Market](http://intranetapps/GainFiles/200309/145986131.pdf) SP3028
*Voluntary Report - public distribution* Madrid Bad weather - and bad
policies - have left Spain\'s animal feed manufacturers scrambling for
grain supplies. Bad weather, in the form of hot, dry conditions, hit
Spain and most of Western Europe during the summer of 2003. Spanish
winter grain crops escaped the worst of the heat: the 2003 harvest
should be marginally below than last year. However, grain crops in
Spain\'s traditional EU suppliers, particularly France, were hard hit,
substantially reducing supplies. Prices for grains in the Spanish market
have risen dramatically during the last two months. Wheat prices this
September are 30 percent higher than last September, while corn and
barley prices are up 18 percent.

**September 23, 2003 France** Biotechnology [French Corn Growers and
Biotechnology](http://intranetapps/GainFiles/200309/145986128.pdf)
FR3052 *Voluntary Report - public distribution* Paris At their annual
meeting, French corn growers called for the authorization of biotech
corn varieties, especially varieties to fight against two new pests: the
corn root worm, which has been detected in France for the second year in
a row, and corn earworm (Heliothis armigera), which damaged 10% of the
2003 sweet corn crop. French corn growers, the leading French farmers
union (FNSEA) and more than a thousand scientists have also started
circulating a petition condemning repetitive biotech test plot
destructions across the country and calling for more biotech
authorizations.\
\[[Download MS
Word](http://199.129.100.31/GainFiles/200309/145986128.doc)\]

**September 9, 2003 France** Agricultural Situation [Impact of Drought
on 2003 French Agricultural
Production](http://intranetapps/GainFiles/200309/145985985.pdf) FR3046
*Voluntary Report - public distribution* Paris At present, indications
are that France's corn crop will be the hardest hit by the recent
drought and heat wave. Corn production is estimated to be down by 27
percent from 2002 due to low yields and a sharp increase in the silage
cut. Cattle and dairy farmers are facing a severe shortage of feed. Milk
production is down and some farmers are being forced to sell their beef
cattle earlier than expected. In addition, wheat production for 2003 is
estimated to drop by 20 percent from 2002, however, quality is expected
to be high. Meanwhile, French rapeseed production has not been
significantly affected by the drought.

**September 8, 2003 Poland** Grain and Feed [Poland Restricts Grain
Exports](http://intranetapps/GainFiles/200309/145985958.pdf) PL3029
*Required Report - public distribution* Warsaw Poland implemented its
first post-Communist era grain export fees effective August 28, 2003
through April 30, 2004, the day prior to Poland's May 1, 2004 EU
accession. The fees are intended to limit exports and support domestic
supplies. Grain import needs will nevertheless remain strong. U.S.
prospects for grain exports to Poland would be good if not for Poland's
grain import trade barriers.

**August 29, 2003 Germany** Grain and Feed [Grain Crop Update - Germany
Releases Official
Estimates](http://intranetapps/GainFiles/200308/145985865.pdf) GM3030
*Voluntary Report - public distribution* Berlin On August 28, 2003,
Germany's Ministry of Agriculture (BMVEL) released its revised official
2003 production estimates for all grains (see table). The new official
numbers are down from previous years because of the dry weather
conditions Germany has experienced this summer.

**August 11, 2003 Greece** Grain and Feed [Karnal Bunt
Disease](http://intranetapps/GainFiles/200308/145985747.pdf) GR3013
*Voluntary Report - public distribution* Rome EU member States,
including Greece, are beginning to utilize new European Plant Protection
Organization (EPPO) standardized testing methods to detect karnal bunt
disease in wheat commodities. Preliminary results show that the
standardized testing methods are more reliable than the subjective
nature of the old testing system. The new EPPO testing standards and the
modification of Greece's wheat import regulations could facilitate the
resumption of U.S. wheat exports.

**August 5, 2003 European Union** Grain and Feed [EU Commission rejects
all new grains export
licences](http://intranetapps/GainFiles/200308/145985686.pdf) E23146
*Voluntary Report - public distribution* Brussels USEU The threat of an
EU cereals shortage due to the current drought, has led the Commission
to suspend the issuing of new grains export licences. In addition a
technical change to the standing refunds system means that an export tax
could be introduced at any moment. The effect of these two changes are
likely to discourage any bids for export licences.

**August 5, 2003 Poland** Grain and Feed [Drought Reduces Grain
Crop](http://intranetapps/GainFiles/200308/145985684.pdf) PL3023
*Voluntary Report - public distribution* Warsaw High temperatures in
July and a lack of precipitation reduced prospects for Poland\'s grain
crop in 2003. Expected low quality and small crop will result in
increased wheat imports. Poor grain expectations in neighboring
countries increase fears for increased grain and food prices.

**July 7, 2003 Spain** Grain and Feed [Spanish Feed Grain Market
Update](http://intranetapps/GainFiles/200307/145985377.pdf) SP3019
*Voluntary Report - public distribution* Madrid At the beginning of
June, the Spain looked set for a bumper grain crop. Cool, wet spring
weather had raised hopes for record high yields throughout the country.
Those hopes evaporated, however, as unseasonably high temperatures set
in, making June 2003 the hottest in more than 50 years. Losses were most
acute in Northern Spain, where the grain was beginning to fill when the
heat went up. Despite these losses, production in 2003/04 is still
likely to be 1 million tons more than the previous year. Due to new
market conditions, U.S. sorghum looks set to return to Spain after a
twoyear hiatus.