More of the same for EU grain, says bakers group

Expected hikes in EU grain production will provide some encouragement for bakers in the bloc, but are not significant to turn around current supply concerns, an industry expert has said.
Gordon Polson, director of industry association, the Federation of Bakers, told us that United States Department of Agriculture (USDA) predictions of a 30 million metric tonnes (mmt) hike in grain production may not allay industry fears over current prices.
"The volumes are not significant enough to turnaround industry concerns and stocks still remain low," he said. "Although production may be on the up, demand is continuing to increase as well."  
The comments follow the publication of new figures from the USDA recording grain production in the 27 EU member states, which suggest that production may reach 286 mmt, compared to just 256 mmt in 2007.
Business as usual
Despite these predictions, Polson said that it was likely to be business as usual for most bakers, many of whom have battled increasing costs for raw ingredients like many other sectors of the food industry over the last year. 
He highlighted growing demand in markets such as India and China not just in terms of baked goods, but also for meat production and feeds, as a key factor putting pressure on current supplies.

"If emerging populations continue to move from agricultural to industrial economies, we may continue to see this price pattern continue," he stated.  "We just have to keep our fingers crossed."
USDA report
However, in its findings, the USDA suggested that despite hard weather during the previous year, current  growing conditions for EU farmers appeared to be much more favourable leading to their improvement estimates for the 2008 -2009 season.
A four per cent increase in crop area within the bloc was also praised as a key driver for the predicted growth.
Domestic grain use is also expected to increase during the current season, rising by about 1.5 mmt to 274 mmt over the year, the USDA said.  The report adds that an estimated 168 mmt of this grain will be used solely for feed use.
In terms of individual crops, wheat production is expected to rise by 9.5 mmt to 139 mmt for the current season.
Corn output for the year could reach 55 mmt, after totalling just 47.5 mmt during the previous year, the USDA said.
Rye crops should also increase by about 1.6mmt to 9.3mmt in 2008, according to the report.