Farm Ireland

Sunday 22 April 2018

European grain prices lift as record rainfall destroys crops

Caitriona Murphy

Caitriona Murphy

Speculation is mounting that a major spike in oat prices on the US market could feed across the Atlantic to lift European grain returns in the coming weeks.

A weather premium is starting to develop as disastrous conditions are reported in Canada, Poland, Russia, Ukraine and the Czech Republic.

The price of oats rose by 40pc last week on the Chicago Board of Trade (CBOT) as a result of the worst Canadian spring in 40 years.

IFA grain secretary Fintan Conway and David Neale from Masstock UK highlighted the effects of weather on major grain producing regions at an IFA tillage meeting in the Anner Hotel in Thurles, on Thursday night.

The Canadian Wheat Board has predicted a drop in oats sowings of 8.5-12.25m acres, growers were told.

Canada is the largest global exporter of oats, accounting for 80pc of the entire market. It is the second largest exporter of wheat and the fourth largest exporter of barley.

Meanwhile, Poland has experienced the worst rain in 140 years, with vast tracks of agricultural land destroyed by flooding. Around 40pc of the country's hops harvest has already been wiped out.

Ukraine, Russia and the Czech Republic have also experienced massive rainfall and flooding.

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This extreme weather has drawn speculators back into the grain market, which industry experts say could lead to a rally in prices.

However, the danger remains that any rally could turn out to be an over-reaction by traders. There is also the danger that it could be too early to benefit Irish growers.

However, any lift in the world market could lead to a bounce in European prices, so the development of a weather premium is positive for Irish tillage growers.

Mills and pig feeders had been standing back from buying wheat until now, saying €140/t for dried November wheat was too expensive. But a sharp lift in prices is likely to entice them back into the market.

The euro/dollar exchange rate is also working in favour of higher prices as European grain becomes ever more competitive on the world market.

The latest spot prices for Irish wheat are €137-139, rising to €138-140 for June/July.

New crop wheat is trading at €132-135/t, while November wheat is at €135-138/t.

Spot prices for barley late last week were €122-127/t, continuing into June and July. New crop barley was trading at €122-124/t, while November barley traded at €125-127/t.

Irish Independent