Grain price hike in Poland in 2010

Grain prices in Poland have started to go up after a period of stability, with expectations of further hikes in the first and second quarters of 2010, an agricultural analyst from BGZ Bank said on Thursday (November 26).

A note from the Polish Grain Chamber said grain traded on average at PLN (zlotych) 20 (US$7.16) to PLN30 (US$10.74) more in feed factories last week compared to the week before mainly because of reduced supply and healthy demand.

BGZ's Izabela Dabrowska-Kasiewicz said the price rise is caused by seasonal factors such as smaller grain harvest and smaller areas sown for harvest in 2010.

Polish grain prices have been relatively stable since September, staying at the same level as a year ago.

BGZ Bank, a major provider of services for the Polish agricultural sector, expected milling wheat prices to stay between PLN455 to PLN470 and feed wheat at PLN435 to PLN450 in the fourth quarter this year.

Data from the Ministry of Agriculture published on Thursday showed milling wheat traded on average at PLN461 per tonne in the week of November 15, 1 percent down, while feed wheat rose to PLN457, a 2.2 percent increase on the previous week. "We have to remember these are average prices from the last week. Dabrowska said these prices are the average prices from last week but market is obviously improving.

In 2010 the bank saw milling wheat prices between PLN475 to PLN515 in the first quarter, and PLN505 to PLN585 zlotys in the second quarter. Feed wheat was expected to come in between PLN450 to PLN490 and PLN485 to PLN560 in those quarters respectively.

Higher prices in the first half of 2010 will be a result of growing demand from the feed and biofuel sectors. Growing interest in futures on behalf of investors may prove to be an additional factor boosting them, BGZ Bank wrote in a note.

US$1 = PLN2.79 (Nov 27)