Intervention price for wheat must rise after 25 years

It is time for the EU to update the intervention price for wheat. This is advocated by the French Association of Wheat Producers (AGPB). The intervention price has been at €101 per ton for almost 25 years, and this price is no longer in proportion to the costs faced by grain producers. In the US, wheat exporters are getting a boost from the exchange rate of the dollar. American wheat is thus becoming increasingly competitive in the global market. We can see the effect of this reflected in the European export figures. The December wheat contract on the Matif closed yesterday €0.25 higher at €192.25 per ton. At the CBoT, wheat rose to its highest level in two weeks. Wheat increased in Chicago by 9 cents to $5.34 per bushel. Corn was also on the rise, increasing by 6¼ cents to $4.29½ per bushel. Soybeans closed 7 cents higher at $10.49¾ per bushel. Europe needs to adjust the intervention price for wheat after almost 25 years. This is argued by Eric Thirouin, the president of the French Association of Wheat Producers (AGPB) in various French media. Since 2001, the intervention price has been set at €101 per ton. Adjusted for inflation, the price should today be €170 according to the AGPB. The price that producers can currently physically obtain for wheat is barely €160 per ton. The gap between production costs and what the farmer can receive for wheat is approximately €70 per ton according to Thirouin. An average grain farm in France is estimated to need an additional €50,000 this season to make up for the loss. Grain is strategicIt bothers Thirouin that there is no strategic storage think tank at the European level. There are such think tanks for fuels and face masks, but not for food. This seems particularly strategic to us. This does mean that we need to think about the entire logistical aspect. We are convinced that we need to reinvent how we manage grains for the next 30 years. With a revision of intervention policy, French grain producers will not be helped in the short term. The AGPB has also called for direct measures to support grain producers. Among other things, taking over social security contributions is mentioned as a concrete measure by AGPB. In terms of wheat exports, the EU has not been doing well. Until September 14, the EU exported 3.78 million tons compared to 5.73 million tons for the same period last year. Barley exports are progressing more smoothly this season with 1.80 million tons exported compared to 1.46 million tons last season. The EU also imported less corn, namely 2.52 million tons this season compared to 4.46 million tons last season. Taking advantageIn the Chicago market, wheat was rising partly due to good export expectations. The dollar is under pressure due to the expectation that the Fed will lower interest rates. Market players also hope that progress will be made in negotiations for a trade agreement between the US and China. Due to the relatively cheap dollar, American wheat is quite competitive in the global market. Some sources note that buyers from Asia are in no rush to purchase wheat from the Black Sea region. Instead, they are much more oriented towards American wheat. Analysts see this as confirmation that the USDA made the right decision by raising export forecasts for American wheat in last Friday's WASDE report. Speaking of world trade. Jordan had a tender out for 120,000 tons of wheat that closed yesterday. Reportedly, the country did not proceed with any purchases in this tender.