December 03, 2003

 

 

Soar in EU Grain Prices May Drive Meat and Egg Prices Up
 

Rising grain prices may drive European meat and egg producers to increase prices in the coming weeks, but some may not do so for fear of weak demand, traders say.

 

In recent months, sharply lower crops due to drought and a summer heatwave have driven up European grain prices, forcing animal feed manufacturers and flour millers to compete for supplies.

 

In France, poultry prices are set to rise after a further sharp increase in wheat and maize values pushed up feed costs, poultry industry group FIA said.

 

The FIA stated since July, wheat prices have been increasing by more than 50%. Maize prices are up some 45%.

 

The FIA added that this had led to a 12-15% rise in the costs of rearing poultry.

 

"An upward revision of selling prices is under consideration," the group said in a statement.

 

It said it had revised its announcement in September pointing to an 8% rise in production costs in light of the continued rise in feed grain prices and no prospect of a turnaround before the next harvest.

 

In Germany, meat and egg prices appeared to be on hold -- at least for now.

 

An analyst said: "I cannot see that German farmers will succeed in pushing through price increases. The price picture for pigs is catastrophic and wholesale prices for slaughter animals have collapsed from about 1.25 euros a kilo in October to about 1.09 euros now."

 

He added: "A lot of farmers have their backs to the wall but I cannot see price increases being accepted in the near future in such a market, regardless how much their animal feed costs."

 

German meat prices were being held down by the impact of economic slowdown on consumer spending and by the efforts of discount retailers such as Aldi and Lidl to increase fresh meat sales through very low prices.

 

In Britain, food industry groups said soaring costs of animal feed would transform into higher pork and poultry prices for consumers.

 

"Grain is a huge component in poultry feed rations and the rises we've seen this year simply cannot be borne by the sector -- realistically, we need shop floor prices to increase by at least 20% to keep us going," Peter Bradnock, chairman of the British Poultry Council, said.

 

The summer heatwave had already forced poultry prices higher, with increases in wholesale values of up to 20% registered in August and September after a million chickens died on British and French factory farms.

 

UK retail chains Tesco and Sainsbury say they are reviewing prices.

 

Spanish industry and agriculture sources said rising grain prices would not affect meat and egg prices.

 

"Grain prices have risen 40% in the past few months, since the heatwave but you go to any market and chicken and rabbit prices have fallen...and a forecast rise in pork prices has not occurred," a source from farmers' union COAG (Council of Australian Governments) said.

 

In Italy, some compounders said they had even turned to milling wheat in feed mixes and that meat and egg prices could go up soon on the back of higher costs.

 

Italian maize prices have surged 40% from a year ago as prices of soft wheat, barley and bran rose due to lower crops and farmers' reluctance to sell.