The medium-term prospects for EU cereal markets are characterised by tight market conditions, low stock levels and prices remaining above long term averages.
These developments are driven by moderate supply growth reaching 305 mio t by 2020, mainly the result of low yield growth rates (0.5% per year on average), and an increase in the domestic use of cereals in the EU, most notably due growing demand by the ethanol and biomass industry in the framework of the 2008 Renewable Energy Directive (RED). Some reallocation between crops in the context of a stable overall cereal area is expected, with maize and soft wheat further increasing their share (up to 16% and 39% respectively) at the expense of other cereals, notably barley which drops to 21% or total cereal area.
Similar drivers impact upon the medium-term prospects for the EU oilseed markets, which show a positive outlook for producers with strong demand and high oilseed oil prices. Supply growth is expected to result from moderate yield growth and to a lesser extent from a slightly expanding oilseed area. The expected increase in domestic use of oilseeds in the EU would also be driven by additional growth of the biodiesel and biomass industry following the initiatives taken by Member States in the framework of the RED. The trade balance is not expected to improve over the medium term as additional imports are required to meet the biofuel targets.
January 2012/ European Commission/ European Union.