Tillage sector caught in eye of global storm
The George Clooney movie The Perfect Storm could be used as an analogy for the 2016 global harvest versus the Irish situation. In the movie, various weather fronts converged which had dramatic consequences for Clooney's fishing vessel.
The weather conditions on the global scene have meant that the 2016/17 marketing year is set to yield the world's largest cereal crop on record.
Unfortunately, like Clooney's boat in the movie, this set of events did not spell good news for the Irish cereals sector. While good weather internationally yielded bumper crops, the same weather and set of conditions were not experienced in Ireland.
Based on provisional harvest estimates for Ireland, a decrease in production over 2015 figures is forecast. While final harvest figures will not be available for some time yet, it is clear that the Irish situation is at odds with the world's cereal balance sheet.
The fact that this year's global record harvest is following on from three previous bumper harvests is what is really affecting the market situation, stock levels and ultimately price.
Unfortunately, demand growth continues to lag behind supply growth which results in rising carry out stocks. As we all know, the end result of a build up of stocks is lower prices.
So the combination of the lower yields in the Irish cereals sector, coupled with lower international and Irish prices, has led to a very negative set of consequences in income terms for the average Irish cereal farmer in 2016.
Irish harvest estimates