European Feed Peas Strengthen

VANCOUVER- Jul 28/06 - SNS -- European feed pea markets continued to advance through the past week, helped by emerging worries about feed ingredient supplies on account of drought reduced yields in parts of Europe.

Australia's Malcolm Bartholomaeus notes in the Callum Downs Commodity News Grain Report that European grain yields were hurt by hot and dry weather at the tail end of the growing season.

"Prices have risen over the last couple of weeks as a result, with new contract highs being set on London and French wheat futures markets. Current high prices are reducing demand for both milling and feed wheats, but as harvest progresses through Europe, prices are expected to ease.

"Bloomberg report that record hot weather, falling grain supplies and growth in biodiesel demand have pushed European wheat prices to their highest levels in 10 years. In the US spring wheat prices are also at 10 year highs for similar reasons.

"In the UK the hot weather has brought harvest forward by as much as one month, to its earliest timing in 30 years according to a Financial Times report. In the Netherlands a heat wave (5 days above 25 degrees or 3 days at 30 degrees!!) has stopped crops growing, with conditions not likely to improve this week. Their grain harvest could fall by 30%," Bartholomaeus said.

"If we look at all grains, excluding rice, Toepfer International report production estimates at 1.575 billion MT, down 1% on the year before, and well below consumption of 1.627 billion MT. Two years ago global stocks were at 329 million MT, down to 313 million MT last year, and falling to 262 million MT this year. The stocks to use ratio falls to 16.1% from 20.7% two years ago."

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