The European Union's decision to open tenders to export almost two million tonnes of grain held in intervention stores signals its intention to continue running down cereal stocks next season, analysts said on Friday.
Analysts said the tenders, which start on July 6, show the EU's 2006/07 (July-June) export campaign will again be a mixture of intervention and free-market sales.
The EU's grain management committee on Thursday agreed to open the new intervention tenders for 1.89 million tonnes.
That included 500,000 tonnes of Hungarian wheat and 400,000 from Poland. There will also be 150,000 tonnes of barley on offer from the Czech Republic, 100,000 from Poland and 200,000 tonnes from Finland.
The EU had already announced the opening of next season's free-market tenders - two million tonnes of wheat and one million tonnes of barley - which generally favour the more traditional exporters of France and Germany.
"They've opened up the stocks that are held in the worst locations from an export point of view. That's to say, the new member states and places like Finland," James Dunsterville of AgriNews in Geneva told Reuters.
The EU's intervention system guarantees farmers a fixed price of just over 100 euros a tonne for their grain. It was originally designed as a market management tool, but under successive EU policy reforms the price has been cut and is now aimed at being a safety net for farmers.
Most EU countries operate a network of state-funded stores.
The EU has been regularly selling off intervention stocks this season and its weekly export tenders have been dominated by sales from stores.
On Thursday, the EU sold no free-market wheat but exported 138,233 tonnes of wheat from stocks. It also sold 144,518 tonnes of intervention grain onto the domestic market and transferred 52,782 tonnes of rye held in Germany to Spain.
In total this season, it has sold almost 10 million tonnes of intervention grain, either for export or onto the domestic EU market. Intervention wheat exports total almost five million tonnes and barley 1.5 million tonnes.
Offers have been made into stores at the same time, but analysts see the bloc's intervention wheat stocks total by the end of the season falling by more than two million tonnes from the start to around six million tonnes. Around 50 percent of all offers have been in Hungary, where farmers have offered 4.45 million tonnes of grain, mostly maize.
Analysts also noted that with India and Brazil seeking to import wheat from the international market and Australia running into trading problems with Iraq, there is potential demand.