Grain price surge as EU output falls
IFA urges growers to hold stocks as Glanbia sets on-account price
Tuesday August 31 2010
Grain prices have again strengthened on the back of further reports of poor harvests in Britain and across continental Europe.
While yesterday was a bank holiday for British traders, by mid-morning prices for milling wheat on French futures markets had traded up by €4.75/t. This was on the back of a €10.75/t surge for MATIF French milling wheat last week and a £3.75/t rise for feed wheat markets in London.
The latest increases will not please suppliers to Glanbia, who were informed on Friday that the on-account prices for green barley and wheat were €135/t and €145/t respectively.
While this is a full €15/t higher than Dairygold's on-account quote, growers will point to market prices that are closer to €160-170/t for green wheat at the moment. Barley is trading at €10/t less.
IFA national grain committee chairman Noel Delany said that growers would be significantly better off to opt for drying and storage rather than waiting for a market review from buyers that traditionally have not delivered.
"The bottom of the market for dried barley is €172 to €176/t collected ex-store and €184 to €187/t for wheat," said Mr Delany.
"Forward prices for September-October collection are €8 to €10/t higher for both wheat and barley.
"Even allowing for a drying charge of €15 to €18/t at 20pc moisture plus weight loss, it's obvious that these on-account prices are a ploy by two of the bigger buyers to undermine the market and condition growers into accepting a below-the-market price."
European harvest production is now reported to be at least 10m tonnes below last season, while Russian grain imports are likely to reach 6m tonnes. Germany, Denmark and Scotland are the latest countries to downgrade their predicted yields.
These developments removed the nervousness that prevailed on markets last week that prices had peaked. There is now increased confidence among farmers that current prices will hold in the short term.
Strengthening grain prices have also fed into a hike in fertiliser prices. CAN increased by more than €35/t over the past two weeks and compounds are reported to be becoming scarce.However, fears that a price spike similar to 2008, when costs doubled, are being played down following the subsequent collapse in demand for fertiliser last year.
With excellent harvesting conditions to hold for the remainder of the week, merchants expect to have the last of this year's crop in by Saturday.
Yields are back on previous years across the country, with spring barley averaging 2.4-2.5t/ac, winter barley 2.9-3t/ac, winter wheat 3.6-3.7t/ac, spring wheat 2.6-2.8t/ac, winter oats 2.8-3t/ac and spring oats at 2.4-2.6t/ac.
- Darrach McCullogh
Irish Independent
