The European Union plans to abandon payments to put corn in public storage because the crop, known as maize in Europe, doesn't keep well and prices are being distorted as stocks swell.
The EU has tightened the criteria for accepting corn into public stocks as supplies built up to 5.1 million metric tons, or two-thirds of all stored grains. The bloc pays producers to remove surplus grain, meat or milk powder to balance the 25-nation market while avoiding a repeat of the wine „lakes” and butter „mountains” that plagued markets in the 1980's. Corn stocks have been growing since 10 new members joined the EU in May 2004, with Hungary now accounting for 93% of the total.
With Romania, Europe's No. 2 corn producer, set to join the bloc next month, the surplus may reach almost 19 million tons in six years, according to the commission. „Under the current market circumstances, there's no reason to be rushing this through,” said Paul Temple, chairman of the cereals committee at the European farm lobby COPA-Cogeca in Brussels, speaking by telephone from Yorkshire, England. „At the moment the market is strong enough that it's not needed.”
The proposal to end payments in July will be presented to the European Commission, the EU's executive body, in two days. Corn for January delivery was trading on the Paris exchange at €155 ($206) a metric ton yesterday. The EU sets a guaranteed minimum price of €101.31 a ton for putting the crop into storage at the start of the marketing year in July. (Bloomberg)