Grain contract prices jump due to drought

CONTRACT prices for this year’s grain reached new highs in Europe recently as concerns grew over crop prospects due to unusually warm and dry spring weather.

Global grain shortages have left markets very sensitive to any bad news for crop prospects, and unusual spring conditions in large areas of Europe led to speculators taking sizeable positions in both the French and British wheat futures markets.

In north America, late spring frost caused concerns that yields will be reduced.

Australia’s worst drought in living memory has had a major effect on markets.

The volatility of grain markets was reflected in this week’s 3.3% fall in wheat future prices for July delivery on the Chicago Board of Trade.

That left prices still up 20% from a six-month low in early April, before freezing temperatures damaged some crops in the central US.

The 3.3% shift was attributed to rains in Australia and Europe easing immediate drought threats. Most wheat-growing areas in Australia received as much as two inches of rain last weekend, and scattered rains also improved prospects for the winter wheat crop in Europe.

Irish growers say they will export their malting barley unless Irish buyers reflect market buoyancy in their prices.

IFA grain committee chairman Colum McDonnell said maltsters and brewers such as Greencore Malt and Diageo are failing to recognise market reality by discounting malting barley prices by €40 per tonne. He advised growers to seek out the best price before committing to any deal.