January 23, 2012

Global demand for grain to remain strong

To be able meet soaring global demand driven by the burgeoning economies of China and the Far East, world grain markets are expected to remain strong, North-east arable farmers were told.

Although grain prices had slipped back from their autumn peak, SAC rural business consultant Julian Bell said world supply and demand trends indicated prices would recover and grain production would remain profitable. He was speaking at a grain growing and marketing seminar at Inverurie organised by SAC and the Home Grown Cereals Authority.

Volatility would be a factor in the market but Bell said the average price of grain over the seasons was likely to remain high and above cost of production, despite higher fuel and fertiliser costs.

Booming export demand for Scotch whisky would also give Scottish arable farmers the opportunity to grow more malting barley.

Maltsters were likely to snap up the expected increase in this year's spring barley crop and prices were expected to remain firm.

Malting barley prices have fallen in line with wheat prices since the harvest peak of GBP210 (US$326.6) a tonne, but Bell suggested demand would remain strong at this year's harvest as maltsters vied to replenish dwindling stocks.

Current buoyant demand contrasts sharply with the depressed state of the market only three or four years ago when maltings were closing on the back of poor demand from distillers and growers were being forced out of production as a result of low prices.

He advised growers to work out their costs and keep an eye on the market to lock into a favourable contract price when prices rise, thus ensuring a positive return given a reasonable harvest.