Storage deals could be option for grain growers
According to IGFA Director Deirdre Webb, marketing experts say the grain market has bottomed, and prices should not fall further, but she predicted that plentiful supply in the short-term will keep a lid on prices.
She said that “foxy” growers are doing storage deals this year in order, to give the market time to evolve.
With Spain and Portugal suffering their worst droughts since the 1940s, they will be short of grain, but that will be alleviated by surplus production in the rest of the EU, and a carry over of grain from last year, said Ms Webb.
She said the quality of the French and UK crop will be key determinants of grain prices within Europe. Balkan wheat has been affected by rain and is likely to end up in animal feed usage in the EU, with Balkan exporters benefiting from cheaper international freight rates.
But Europe also needs good quality grain to supply the higher quality market outlets.
The European Commission last year granted the full import quota of third country wheat for the first quarter of the marketing year, which has the potential to bring a further 590,000 tonnes onto the market between now and September.
As a result, the differential between old and new crop wheats has narrowed, and those holding old crop stocks in the hope of a strong July-August shipping market to Spain and Portugal could be disappointed, said the IGFA Director.
EU grain production is predicted by the Commission to be in line with the average of the last five years, with drought blamed for a 10% fall from last year’s high yields.
Much of the yield loss is expected in durum wheat, used for making pasta. For soft wheat, output is predicted to be 5.2% lower than 2004, but 5% higher than average.
Barley production would be off 10% compared to last year, and marginally lower than average, while maize yield is predicted to dip 6% from 2004, but still stay 1% above average.
