Grain prices rise on back of maize shortage

Caitriona Murphy

European grain prices have staged a significant recovery after they plummeted in recent weeks. The latest United States Department of Agriculture (USDA) figures drove prices upwards again on Thursday.

Futures prices on the LIFFE feed wheat market have recovered after falling by as much as €39.59/t in the past month. A similar drop and lift has been recorded on the Paris milling wheat MATIF market.

While Irish spot prices did not fall to the same extent, they have followed the recovery in European prices.

The spot price for Irish new crop wheat at harvest fell to its lowest point of €185/t just before St Patrick's Day but gained more than €15/t to reach €200-202/t by the weekend.

The broader European recovery in prices was helped by the latest report from the USDA. The wheat area planted in the US for harvest this year is forecast to increase as farmers react to the recent period of higher prices. The total wheat area is forecast to rise by 1.8million hectares to 23.5m hectares. Industry experts say that while this upward forecast could result in some downward pressure on wheat prices, US maize stocks remain critical.

The USDA figures estimated maize stock at 165.6m tonnes, down significantly from 195m tonnes a year ago, and also below what the trade expected. The figures equate to a maize supply of just 18 days, regarded as a very tight stocks-to-use ratio.

The US last week confirmed that it sold 1.25m tonnes of maize to a single buyer but would not reveal the identity of the buyer, which is widely believed to be China. Confirmation from the US of the sale provided a further boost to the market.

Meanwhile, grain traders continue to closely monitor weather conditions across the world. There is some concern about the effect of winter kill in Poland and parts of Germany, while a shortage of rain in northern France, northern Germany and the south of England is being observed with an eagle eye.

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With price volatility set to continue, the markets are hanging on every word.

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