Grain markets braced for Japan impact

Caitriona Murphy

Grain markets were jerked around like rag dolls in the past week, starting with a steep fall in spot and futures prices for cereals, followed by a major recovery towards the end of the week.

All eyes are now on Japan as financial investors wonder whether the earthquake, tsunami and nuclear disaster will set back the global economic recovery.

The Japanese catastrophe only added to the worldwide panic generated by the crisis in the North Africa which deepened this week.

Investors first rushed out of grain at the prospect of making profit on oil before returning in droves late last week.

Between March 3 and March 16, spot prices for feed wheat on the London Liffe fell by almost £29.20 (€33.40) or almost 15pc from £196.55 (€224.87) to £167.35 (€191.46).

May futures prices fell by £21.20 (€24.25) from £199.20 (€227.91) to £178 (€203.63) in the same period. The steep fall was repeated on the Paris milling wheat and Chicago CBOT markets. However, the recovery was just as dramatic, with one industry expert describing last week as "possibly one of the most volatile weeks in the history of the grain markets. Heavy losses early in the week matched by heavy gains later in the week."

Here at home, the erratic movements sent buyers and sellers into hibernation and even scuppered a possible deal between the IFA and Boortmalt on forward prices for malting barley.

The markets look set to remain jittery for the foreseeable future but grain industry experts maintain the underlying fundamentals of the cereal market are still pointing towards a firm price for farmers for their grain.

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