Farm Ireland

Saturday 17 March 2018

Wheat and barley prices fall amid oil and energy turmoil

Caitriona Murphy

Caitriona Murphy

Spot prices for Irish wheat and barley fell by around €10/t to €228-230/t and €208-212/t respectively in recent days as turmoil on the oil and energy markets continued.

Many Irish mills are running 20-25pc behind expectations on feed sales drawdown, resulting in little demand for spot wheat or barley.

Demand on the world market for soft commodities such as grain continues to fall as concern grows that the rising oil prices will slow down the global economic recovery.

On the supply side crop reports are mainly positive, showing that the majority of crops have wintered well and spring crops are in good shape.

As a result, futures prices for cereals have also fallen, with Paris milling wheat dropping €10/t for March and May contracts on Thursday, before recovering by €5/t.

Chaos in the Middle East is also pulling speculative fund investors out of the grain market and into the oil market in the hope of bigger profits.

In recent weeks, similar price volatility resulted in North African and Middle East buyers returning to the market to buy physical grain in an effort to boost their stocks and there is a chance this could happen again.


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Meanwhile, grain market analysts say it's increasingly unlikely the Russian ban on grain exports will be lifted in July, as had been indicated.

A tight balance between grain supply and demand in Russia means that the government will be reluctant to lift the export ban until the harvest is complete and grain availability for the next season is known, according to British analysts HGCA, who believe Russia will not be in a position to export grain until the last quarter of this year at the earliest.

Since Russia is a key source of cheap quality grain to the world market, its presence or absence could have a major effect on prices.

Here at home, Teagasc has confirmed a massive hike in the area of land sown to winter cereals for this coming harvest.

Winter wheat area has jumped by 34pc from 56,000ha 12 months ago to 75,000ha last year, while winter barley jumped by 30pc from 27,000ha last year to 35,000ha this year.

The winter oats acreage moved up 10pc from 10,000ha to 11,000ha but many oat growers were stung by the harsh winter. Around half of the 11,000ha required re-sowing as a spring crop because of significant frost damage.

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