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. Last Updated: 07/27/2016

EU Traders Cannot Get Enough Russian Wheat

AMSTERDAM, Netherlands -- The first tranche of a European Union quota for 592,900 tons of wheat from the Black Sea is hugely oversubscribed, with traders submitting bids for an estimated 18 million tons, a Dutch broker said Tuesday.

"That means people will only get 3 to 4 percent of their requests," Gert Jan van Noortwijk, a partner in Dutch grain broker Alcom, said, citing trade estimates.

Dutch traders submitted bids totaling 6.7 million tons, with Italy around 3.7 million, Spain at 3.5 million and France at 2.5 million.

The EU slapped on quotas effective Jan. 1 to curb a rising tide of cheap grain arriving chiefly from Russia and Ukraine and set an overall 2003 quota of 2.98 million metric tons of medium-and low-quality wheat.

Within this, the United States will take 572,000 tons and Canada 38,000 tons of the soft wheat quota, both at a duty of 12 euros per ton.

The rest of the wheat quota of 2.37 million tons, open to other importers on a first-come first-served basis, was split into four tranches.

Imports outside the quota are subject to a tariff of 95 euros per ton.

The EU will soon restart talks with Russia over a possible exclusive allocation for the bloc's grain imports, in line with similar deals agreed with Canada and the United States, officials said this week.

Both Russia and Ukraine have been lobbying hard for special access within the EU's 2003 import quota, which entered into force Jan. 1 and awards country-specific rights to the North Americans -- both major grain trading partners of the EU.

While Ukraine is believed to be almost ready to sign up to the EU's offer, reaching a deal with Russia has proved trickier while Moscow holds out for a larger slice of the overall quota.

"Ukraine is not the problem, Russia is being more difficult," one European Commission official said. "[Brussels and Moscow] will continue talking."

Although no date had yet been set for the next round of EU-Russia talks on grain quotas, negotiations were expected to resume shortly, he said.

Diplomats have mentioned reports of an offer of 600,000 tons made to Russia within the EU's overall quota, which Moscow is said to have rejected as being too low. Details of offers made by the EU to Ukraine still remain tightly guarded.

Moscow has raised the heat with a promise to slap tariffs and quotas on imports of poultry, pork and beef -- a move that would have a serious impact on the EU's livestock industry.

Russia, Europe's largest livestock market, has not singled out the EU as a target but diplomats say the timing of its planned curbs suggests a wish to retaliate over grain quotas.