January 5, 2012


Latvia reports rising grain prices


The surveyed farmers said that an increase in grain prices has been reported in Latvia lately.


Edgars Ruza, CEO of Latraps agricultural services co-operative, said that grain prices have been rising steeply over the past couple of weeks. "Prices have started climbing swiftly both for last year's and the upcoming crop," Ruza said, explaining that the price hikes have been triggered by drought in South America raising concerns about the corn and soy harvest, as well as the euro rate against the US dollar.


Whether the prices will continue to rise is difficult to tell though, Ruza said. "It is too early to talk about price trends in a more distant future, because they depend on weather conditions. If the weather in South America improves, the prices might stabilize and even slip a bit. What will happen with the euro rate against the US dollar, nobody can tell, these would be just speculations," Ruza said, adding that the current price increases might partly be speculative.


Despite the recent price increases, grain prices still remain lower than last year, Ruza said, noting however that in January 2011 they had surged to the highest point in recent years. "Grain prices peaked last January," he said, explaining that unlike during the last months of 2010, grain prices were very stable and did not show strong fluctuations in 2011.


Indulis Jansons, board chairman of the Latvian Association of Agricultural Co-operatives (LLKA), said that grain prices have been rising over the past weeks. "During the last couple of weeks grain prices have risen by approximately 5%," Jansons said, adding that the rise has been seen not only on exchanges, but also on the real market.


The head of the association also put down the price hikes to the adverse weather conditions in South America and elsewhere in the world. "There is a drought in South America, and there are also other parts of the world that have been hit by unfavourable weather conditions, all of which affect the grain prices," Jansons said, but declined to predict how the situation in the grain market might develop in the future. "It is impossible to predict, because nobody can tell what will happen next, for instance, with the euro," he added. Jansons pointed out that the grain prices are currently by some 15-20% lower than a year ago.


Juris Lazdins, board chairman of Zemnieku Saeima (Farmers Assembly), said that although the grain prices are fluctuating within the range of about EUR10 (US$12.92), they are still generally stable. "What the future trends will is hard to tell," Lazdins said, adding that the current price increase might not be a lasting trend. He also said, however, that the relatively stable grain prices are favourable to the agricultural sector, including growers and grain processing companies, as they provide an opportunity to plan expenses in advance.


As Latvia saw a poor grain harvest due to bad weather conditions in 2010, and Russia's ban on grain exports sent prices in the world surging, grain prices rose to the highest point in recent year in the winter/spring season of 2011.