May 26, 2008

German grain prices to decline in 2008
 

German grain prices have trended downward significantly since the peak at the beginning of 2008, according to a USDA attache report posted Friday on the Foreign Agricultural Services Web site.

Rye prices are foreseen to drop even further in expectation of a sizable harvest.

Lower rye prices have also sparked revival plans for a currently out-of-operation bioethanol plant.

Mid-May rains have been beneficial for the central and southern parts of Germany. The northern part of the country received only spotted showers.

Beginning May 15, extensive rains over the southern two-thirds of Germany brought relief to the crops in the field. More rain is forecast for this part of Germany for the week of May 19.

On the other hand, the northern third of the country received only some spotted showers and still needs rains since wheat and barley are in the ear developing stage.

Because of heavy winter rains the plants did not develop efficient rooting systems. This has made them more vulnerable to water shortage. For the southern part of Germany recent rains provide a promising condition for a sizable crop.

Given the current moisture shortage situation in Northern Germany FAS Germany remains with its grain crop forecast of 47 million tonnes, 6.3 million tonnes higher than in 2007. If the northern parts of the country also receive additional rain within the next two weeks crop prospects will increase in this area.

Grain markets are currently relatively quiet. Most old crop supplies have been sold and only some limited leftovers are still in farmers' ownership. In addition, the processors are not appearing as active buyers. Since grain prices peaked earlier this year, prices for feed barley have dropped by EUR46/tonne and prices for rye are now EUR 46/tonne lower.