""

Voluntary Report - public distribution

**Date:** 12/3/2003

**GAIN Report Number:** PO3025

PO3025

**Portugal**

**Grain and Feed**

**Tight Supply Situation Draws U.S. Grain into Portugal**

**2003**

**Approved by:**

![](media/image1.wmf)Lloyd Fleck

U.S. Embassy

**Prepared by:**

Leonor Ramos

**Report Highlights:**

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. Additional sales will depend on tariff and exchange rates. U.S.
Hard Spring wheat sales have also been unusually strong in Portugal this
year. 1 USD = 0.80 Euro.

Includes PSD Changes: No

Includes Trade Matrix: No

Unscheduled Report

Madrid \[SP1\]

\[PO\]

# TIGHT SUPPLY CONDITIONS IN THE PORTUGUESE GRAIN MARKET

Affected by adverse weather conditions, Portugal's 2003 grain crops fell
sharply from the previous year. According to the national statistics
office (INE), 2003 output of durum and soft wheat were down by 55 and 45
percent relative to 2002 levels. Oats, rye, triticale and barley outputs
fell by 30, 20, 45, and 55 percent. Although most corn is irrigated,
last summer's hot weather hurt the crop, dropping production 10 percent.
The rice crop was the only grain unaffected by the weather: the 2003
harvest was unchanged from 2002 levels.

Besides the short crops, grain prices have been boosted by unusually
poor forage conditions (also due to the drought) and by the
exceptionally short 2003 grain crops in both Western and Eastern Europe.
Wheat prices are reported by the industry to have soared since the
beginning of the 2003/04 marketing year and are now up to 50 higher than
beginning-of-year levels. AgOffice trade sources report that French
milling wheat is currently quoted at 167.5 €/ton FOB, equivalent to 187
€/ton, *Leixões*, CIF (182 € a week ago). British milling wheat for
crackers is currently quoted at 187 €/ton, *Leixões*, CIF (180 €/ton a
week ago).

The closing price gap between French and British wheat is another sign
of the state the EU grains market is in. While the EU scarcity in wheat
is driving up prices for all traditionally less-demanded wheat types, a
recent British wheat stocks re-assessment is reported by the local trade
to have caused a 5 UK pound/ton price increase on December 1. Trade
sources also report that Spanish durum wheat delivered to millers
factory gate is currently quoted at 195 €/ton (190-192 €/ton a week
ago), and may reach 200 €/ton shortly.

Feed wheat has become a rarity in the local market. Portuguese feed
mills have begun to compete with the flour milling industry for wheat,
which has further contributed to drive up prices. Industry sources claim
that feed wheat prices have already surpassed last year's levels for
milling wheat and are approaching last year's durum prices. As milling
margins have eroded, the local millers have been forced to tackle the
sensitive issue of raising flour prices, which will ultimately impact
bread prices. In fact, the bakers association has just announced that
bread prices are to be increased by 35 percent at the beginning of
January 2004.

The current grain market situation has aggravated supply conditions for
the feed industry, which has raised prices of compound feed by some
fifteen percent over the past two months. Though considerably
higher-priced than a year ago, corn remains the most competitive feed
grain, and is expected to displace large quantities of wheat in feed.
Producer sources report that corn is currently sold by local Producer
Organizations at 170 --175 €/ton, ex-factory gate (compared to 135-145
€/ton a year ago). French corn is currently sold at 185 €/ton (Lisbon
Port, unloaded on truck); transportation costs from France into Portugal
account for about 23 €/ton. The short EU corn supply has caused French
corn prices to rise sharply, leading to the erosion of the usual price
difference between French and local corn.

The shortage of locally-produced grains has also encouraged interest in
lower-priced substitutes for traditionally used feed grains. Thanks to a
5-10 €/ton price advantage over corn, a 27,000 ton shipment of U.S.
sorghum is due to arrive shortly in Portugal, the first of this
magnitude in many years. Since Portuguese feed millers are unfamiliar
with sorghum, further sales will depend on a continuation of sorghum's
price discount to corn.

There are several factors that will affect this discount. First, the
EU's import duty. The EU Commission recently raised the import duty of
sorghum by 5 €/ton; it now stands at 13.49 €/ton (with a 2 €/ton
abatement for Atlantic ports). Local traders say that the duty is being
set artificially high as the EU underestimates the transportation costs
in calculating the duty. The second factor is the value of the dollar
against the euro. The recent weakness of the dollar has helped maintain
favorable price ratios between sorghum and traditional feed grains.
Despite these uncertainties, local traders are bullish on sorghum's
prospects; they believe that as much as 100,000 tons of sorghum could
enter the Portuguese market in 2003/04.

Besides sorghum, near-future prospects for U.S. wheat exports into
Portugal are have also significantly improved. Since the EU eliminated
duties on high-protein wheat last July, local traders have been making
unusually heavy purchases of U.S. Hard Spring wheat. As much 150,000
tons of U.S. HS could be imported during 2003/04 (compared to only
47,000 tons the previous year).

1 USD = 0.80 Euro

# Commodity Name: Total Wheat

  --------------------- -------------- --------- ------------ ---------- ------------ ----------
  **PSD Table**                                                                       

  **Country**           **Portugal**                                                  

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

                        2001           Revised   2002         Estimate   2003         Forecast

                        \[Post                   \[Post                  \[Post       
                        Estimate\]               Estimate\]              Estimate\]   

  **Market Year Begin**                Jul-01                 Jul-02                  Jul-03

  Area Harvested                       184                    231                     180

  Beginning Stocks                     40                     40                      40

  Production                           154                    434                     203

  MY Imports                           1455                   1506                    1410

  Jul-June Imports                     1455                   1506                    1410

  Jul-June Imports from                20                     47                      150
  U.S.                                                                                

  TOTAL SUPPLY                         1649                   1980                    1653

  MY Exports                           114                    171                     115

  Jul-June Exports                     114                    171                     115

  Feed Dom.Consumption                 595                    869                     598

  TOTAL Dom.                           1495                   1769                    1498
  Consumption                                                                         

  Ending Stocks                        40                     40                      40

  TOTAL DISTRIBUTION                   1649                   1980                    1653
  --------------------- -------------- --------- ------------ ---------- ------------ ----------

  ------------------------- --------------- --------------- --------------
  **Import Trade Matrix**                                   

  **Country**               Portugal                        

  **Commodity:**            Total Wheat                     

  Time period               Jul/June        Units:          Metric Tons

  Imports for:              **2001**                        2002

  U.S.                      20524           U.S.            46967

  Others                                    Others          

  France                    551099          France          506399

  Germany                   362644          Germany         215174

  Spain                     99328           U.K.            205451

  U.K.                      67438           Spain           76492

  Other EU                  54525           Other EU        38134

  Ukraine                   186829          Ukraine         297430

  Bulgaria                  40851           Bulgaria        40041

  Lithuania                 38101           Russia          38206

  Turkey                    25674           Turkey          16423

                                            Kazakhstan      13480

  Total for Others          1426489                         1447230

  Others not Listed         8322                            12214

  Grand Total               1455335                         1506411
  ------------------------- --------------- --------------- --------------

  ------------------------- ---------------- ------------- --------------
  **Export Trade Matrix**                                  

  **Country**               Portugal                       

  **Commodity:**            Total Wheat                    

  Time period               Jul/June         Units:        Metric Tons

  Exports for:              **2001**                       2002

  U.S.                      0                U.S.          0

  Others                                     Others        

  Spain                     113930           Spain         167456

                                             U.K.          2497

                                             France        1000

                                                            

                                                            

                                                            

                                                            

                                                            

                                                            

                                                            

  Total for Others          113930                         170953

  Others not Listed         0                              0

  Grand Total               113930                         170953
  ------------------------- ---------------- ------------- --------------

# Commodity Name: Barley

  -------------------- -------------- --------- ------------ ---------- ------------ ----------
  **PSD Table**                                                                      

  **Country**          **Portugal**                                                  

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

                       2001           Revised   2002         Estimate   2003         Forecast

                       \[Post                   \[Post                  \[Post       
                       Estimate\]               Estimate\]              Estimate\]   

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

  Area Harvested                      12                     11                      8

  Beginning Stocks                    0                      9                       0

  Production                          13                     20                      9

  MY Imports                          412                    288                     289

  Oct-Sep Imports                     432                    250                     290

  Oct-Sep Imports from                0                      0                       0
  U.S.                                                                               

  TOTAL SUPPLY                        425                    317                     298

  MY Exports                          58                     9                       5

  Oct-Sep Exports                     58                     5                       5

  Feed Dom.Consumption                195                    145                     130

  TOTAL Dom.                          358                    308                     293
  Consumption                                                                        

  Ending Stocks                       9                      0                       0

  TOTAL DISTRIBUTION                  425                    317                     298
  -------------------- -------------- --------- ------------ ---------- ------------ ----------

  -------------------------- ---------------- ------------- --------------
  **Import Trade Matrix**                                   

  **Country**                Portugal                       

  **Commodity:**             Barley                         

  Time period                Jul/June         Units:        Metric Tons

  Imports for:               **2001**                       2002

  U.S.                       0                U.S.          0

  Others                                      Others        

  Germany                    135474           Germany       102763

  France                     97540            U.K.          81696

  U.K.                       79966            France        55752

  Spain                      61440            Spain         40288

  Other EU                   7142             Other EU      7415

  Brazil                     28238                           

  Bulgaria                   2634                            

                                                             

                                                             

                                                             

  Total for Others           412434                         287914

  Others not Listed          0                              0

  Grand Total                412434                         287914
  -------------------------- ---------------- ------------- --------------

  --------------------- ----------------- ----------------- --------------
  **Export Trade                                            
  Matrix**                                                  

  **Country**           Portugal                            

  **Commodity:**        Barley                              

  Time period           Jul/June          Units:            Metric Tons

  Exports for:          **2001**                            2002

  U.S.                  0                 U.S.              0

  Others                                  Others            

  Spain                 57618             Spain             8939

                                                             

                                                             

                                                             

                                                             

                                                             

                                                             

                                                             

                                                             

                                                             

  Total for Others      57618                               8939

  Others not Listed     0                                   0

  Grand Total           57618                               8939
  --------------------- ----------------- ----------------- --------------

# Commodity Name: Rye

  -------------------- -------------- --------- --------- ---------- ---------- ----------
  **PSD Table**                                                                 

  **Country**          **Portugal**                                             

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

                       2001           Revised   2002      Estimate   2003       Forecast

                                                                                

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

  Area Harvested                      38                  34                    34

  Beginning Stocks                    0                   0                     0

  Production                          24                  34                    28

  MY Imports                          19                  20                    27

  Oct-Sep Imports                     17                  20                    27

  Oct-Sep Imports from                0                   0                     0
  U.S.                                                                          

  TOTAL SUPPLY                        43                  54                    55

  MY Exports                          1                   0                     0

  Oct-Sep Exports                     0                   0                     0

  Feed Dom.Consumption                0                   0                     0

  TOTAL Dom.                          42                  54                    55
  Consumption                                                                   

  Ending Stocks                       0                   0                     0

  TOTAL DISTRIBUTION                  43                  54                    55
  -------------------- -------------- --------- --------- ---------- ---------- ----------

  --------------------- --------------- ------------------- --------------
  **Import Trade                                            
  Matrix**                                                  

  **Country**           Portugal                            

  **Commodity:**        Rye                                 

  Time period           Jul/June        Units:              Metric Tons

  Imports for:          **2001**                            2002

  U.S.                  0               U.S.                0

  Others                                Others              

  Germany               15907           Spain               8494

  Spain                 2981            Germany             4576

  Other EU              2               Italy               1563

                                        Other EU            2

                                        Ukraine             5187

                                                             

                                                             

                                                             

                                                             

                                                             

  Total for Others      18890                               19822

  Others not Listed     0                                   0

  Grand Total           18890                               19822
  --------------------- --------------- ------------------- --------------

  --------------------- --------------- ------------------- --------------
  **Export Trade                                            
  Matrix**                                                  

  **Country**           Portugal                            

  **Commodity:**        Rye                                 

  Time period           Jul/June        Units:              Metric Tons

  Exports for:          **2001**                            2002

  U.S.                  0               U.S.                0

  Others                                Others              

  Spain                 704             Spain               28

                                                             

                                                             

                                                             

                                                             

                                                             

                                                             

                                                             

                                                             

                                                             

  Total for Others      704                                 28

  Others not Listed     0                                   0

  Grand Total           704                                 28
  --------------------- --------------- ------------------- --------------

# Commodity Name: Sorghum

  ---------------------- -------------- --------- ------ ---------- ------- ----------
  **PSD Table**                                                             

  **Country**            **Portugal**                                       

  **Commodity**          **Sorghum**                     (1000              
                                                         HA)(1000           
                                                         MT)                

                         2001           Revised   2002   Estimate   2003    Forecast

                                                                            

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

  Area Harvested                        38               34                 34

  Beginning Stocks                      0                0                  0

  Production                            0                0                  0

  MY Imports                            1                1                  100

  Oct-Sep Imports                       1                1                  100

  Oct-Sep Imports from                  0                0                  100
  U.S.                                                                      

  TOTAL SUPPLY                          1                1                  100

  MY Exports                            0                0                  0

  Oct-Sep Exports                       0                0                  0

  Feed Dom.Consumption                  0                0                  99

  TOTAL Dom. Consumption                1                1                  100

  Ending Stocks                         0                0                  0

  TOTAL DISTRIBUTION                    1                1                  100
  ---------------------- -------------- --------- ------ ---------- ------- ----------

  --------------------- -------------- -------------------- -------------
  **Import Trade                                            
  Matrix**                                                  

  **Country**           Portugal                            

  **Commodity:**        Sorghum                             

  Time period           Jul/June       Units:               Metric Tons

  Imports for:          **2001**                            2002

  U.S.                  0              U.S.                 0

  Others                               Others               

  Spain                 536            Spain                909

  France                458            France               375

  Other EU              161            Other EU             33

  Egypt                 21                                   

                                                             

                                                             

                                                             

                                                             

                                                             

                                                             

  Total for Others      1176                                1317

  Others not Listed     0                                   0

  Grand Total           1176                                1317
  --------------------- -------------- -------------------- -------------

  --------------------- -------------- -------------------- -------------
  **Export Trade                                            
  Matrix**                                                  

  **Country**           Portugal                            

  **Commodity:**        Sorghum                             

  Time period           Jul/June       Units:               Metric Tons

  Exports for:          **2001**                            2002

  U.S.                  0              U.S.                 0

  Others                               Others               

  Spain                 50             Spain                38

                                                             

                                                             

                                                             

                                                             

                                                             

                                                             

                                                             

                                                             

                                                             

  Total for Others      50                                  38

  Others not Listed     0                                   0

  Grand Total           50                                  38
  --------------------- -------------- -------------------- -------------

# Commodity Name: Oats

  ---------------------- -------------- --------- ------ ---------- ------ ----------
  **PSD Table**                                                            

  **Country**            **Portugal**                                      

  **Commodity:**         **Oats**                        (1000             
                                                         HA)(1000          
                                                         MT)               

                         2001           Revised   2002   Estimate   2003   Forecast

                                                                           

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

  Area Harvested                        61               57                65

  Beginning Stocks                      0                0                 0

  Production                            39               61                43

  MY Imports                            11               14                15

  Oct-Sep Imports                       13               14                15

  Oct-Sep Imports from                  0                0                 0
  U.S.                                                                     

  TOTAL SUPPLY                          50               75                58

  MY Exports                            0                0                 0

  Oct-Sep Exports                       0                0                 0

  Feed Dom.Consumption                  4                28                11

  TOTAL Dom. Consumption                50               75                58

  Ending Stocks                         0                0                 0

  TOTAL DISTRIBUTION                    50               75                58
  ---------------------- -------------- --------- ------ ---------- ------ ----------

  ------------------------- --------------- ------------- ----------------
  **Import Trade Matrix**                                 

  **Country**               Portugal                      

  **Commodity:**            Oats                          

  Time period               Jul/June        Units:        Metric Tons

  Imports for:              **2001**                      2002

  U.S.                      0               U.S.          0

  Others                                    Others        

  Spain                     3760            U.K.          12100

  U.K.                      3475            Spain         1522

  Germany                   2640            Other EU      70

  Other EU                  736                            

  Australia                 119                            

                                                           

                                                           

                                                           

                                                           

                                                           

  Total for Others          10730                         13692

  Others not Listed         0                             0

  Grand Total               10730                         13692
  ------------------------- --------------- ------------- ----------------

  --------------------------- ----------------- ---------- ----------------
  **Export Trade Matrix**                                  

  **Country**                 Portugal                     

  **Commodity:**              Oats                         

  Time period                 Jul/June          Units:     Metric Tons

  Exports for:                **2001**                     2002

  U.S.                        0                 U.S.       0

  Others                                        Others     

  Spain                       231               Spain      382

                                                            

                                                            

                                                            

                                                            

                                                            

                                                            

                                                            

                                                            

                                                            

  Total for Others            231                          382

  Others not Listed           0                            0

  Grand Total                 231                          382
  --------------------------- ----------------- ---------- ----------------

# Commodity Name: Rice, Milled

  -------------------- -------------- --------- ------ ---------- ---------- ----------
  **PSD Table**                                                              

  **Country**          **Portugal**                                          

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

                       2001           Revised   2002   Estimate   2003       Forecast

                                                                             

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

  Area Harvested                      25               25                    25

  Beginning Stocks                    25               25                    25

  Production (Rough)                  146              146                   146

  Milling Rate                        0,70             0,70                  0,70

  Production (Milled)                 102              102                   102

  MY Imports                          80               95                    91

  Jan-Dec Imports                     101              86                    91

  Jan-Dec Imp from                    0                0                     1
  U.S.                                                                       

  TOTAL SUPPLY                        207              222                   218

  MY Exports                          7                11                    10

  Jan-Dec Exports                     8                9                     10

  Domestic Consumption                175              186                   188

  Ending Stocks                       25               25                    20

  TOTAL DISTRIBUTION                  207              222                   218
  -------------------- -------------- --------- ------ ---------- ---------- ----------

  ---------------------- ------------- ----------------- -----------------
  **Import Trade                                         
  Matrix**                                               

  **Country**            Portugal                        

  **Commodity:**         Rice                            

  Time period            Jul/June      Units:            Metric Tons

  Imports for:           **2001**                        2002

  U.S.                   0             U.S.              530

  Others                               Others            

  Spain                  14367         Spain             25162

  France                 8767          France            8335

  Other EU               3865          Other EU          1933

  Guiana                 47463         Guiana            52517

  Suriname               2894          Suriname          3319

                                                          

                                                          

                                                          

                                                          

                                                          

  Total for Others       77356                           91266

  Others not Listed      3094                            3245

  Grand Total            80450                           95041
  ---------------------- ------------- ----------------- -----------------

  --------------------- -------------- ----------------- -----------------
  **Export Trade                                         
  Matrix**                                               

  **Country**           Portugal                         

  **Commodity:**        Rice                             

  Time period           Jul/June       Units:            Metric Tons

  Exports for:          **2001**                         2002

  U.S.                  1              U.S.              11

  Others                               Others            

  Belgium               3456           Belgium           6644

  Spain                 2098           Spain             1959

  Netherlands           997            Netherlands       1325

  U.K.                  364            U.K.              238

  Other EU              331            Other EU          378

  Angola                97                               189

                                                          

                                                          

                                                          

                                                          

  Total for Others      7343                             10733

  Others not Listed     38                               45

  Grand Total           7382                             10789
  --------------------- -------------- ----------------- -----------------

# Commodity Name: Corn

  ---------------------- -------------- --------- ------------ ---------- ------------ -- ----------
  **PSD Table**                                                                           

  **Country**            **Portugal**                                                     

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

                         2001           Revised   2002         Estimate   2003            Forecast

                         \[Post                   \[Post                  \[Post          
                         Estimate\]               Estimate\]              Estimate\]      

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

  Area Harvested                        155                    139                        139

  Beginning Stocks                      216                    210                        210

  Production                            907                    790                        711

  MY Imports                            1077                   1073                       1168

  Oct-Sep Imports                       1127                   1060                       1168

  Oct-Sep Imports from                  0                      0                          0
  U.S.                                                                                    

  TOTAL SUPPLY                          2200                   2073                       2089

  MY Exports                            7                      10                         9

  Oct-Sep Exports                       10                     9                          9

  Feed Dom.Consumption                  1873                   1743                       1790

  TOTAL Dom. Consumption                1983                   1853                       1900

  Ending Stocks                         210                    210                        180

  TOTAL DISTRIBUTION                    2200                   2073                       2089
  ---------------------- -------------- --------- ------------ ---------- ------------ -- ----------

  ------------------------ --------------- ---------------- ---------------
  **Import Trade Matrix**                                   

  **Country**              Portugal                         

  **Commodity:**           Corn                             

  Time period              Jul/June        Units:           Metric Tons

  Imports for:             **2001**                         2002

  U.S.                     0               U.S.             0

  Others                                   Others           

  France                   538294          France           482457

  Spain                    135784          Spain            63937

  Other EU                 4576            Other EU         2797

  Argentina                290307          Argentina        444904

  Brazil                   86310           Brazil           78368

                                                             

                                                             

                                                             

                                                             

                                                             

  Total for Others         1055271                          1072463

  Others not Listed        21554                            773

  Grand Total              1076825                          1073236
  ------------------------ --------------- ---------------- ---------------

  --------------------- ------------ --------------------- ---------------
  **Export Trade                                           
  Matrix**                                                 

  **Country**           Portugal                           

  **Commodity:**        Corn                               

  Time period           Jul/June     Units:                Metric Tons

  Exports for:          **2001**                           2002

  U.S.                  0            U.S.                  0

  Others                             Others                

  Spain                 6900         Spain                 9207

  Other EU              2            Other EU              26

  Angola                138          S.Tome & Prince       88

  S.Tome & Prince       87           Cape Verde            82

                                                            

                                                            

                                                            

                                                            

                                                            

                                                            

  Total for Others      7127                               9403

  Others not Listed     60                                 101

  Grand Total           7187                               9504
  --------------------- ------------ --------------------- ---------------