June 23, 2011

Spain's grain prices remain firm on harvest concerns

Animal feed makers in major grain buyer Spain have not benefitted from a recent pull-back in world prices due to lingering concerns over harvests in France and Germany, a sector spokesman said on Wednesday (Jun 22).

Miguel Angel Diaz, president of industry group CESFAC, said livestock farmers have been unable to pass on steep increases in grain prices over the past year to wholesalers.

"At some stage there were expectations of some downward pressure," Miguel Angel Diaz told journalists, referring to market reaction to Russia returning to the export markets after a year's absence," he said.

"Unfortunately, the drought situation in France and Germany has not encouraged matters. The harvest is under way here and barley prices have not fallen at all."

Barley ripens before wheat and field work is under way in the southern Castilla-La Mancha region, which is expected to produce 2.4 million tonnes of barley this summer.

Spanish grain merchants' association Accoe estimates domestic barley prices have risen by an average of 72% since the current market year began in July 2010, and soft wheat by 66%.

Grain farmers in Spain have meanwhile been looking forward to harvesting their best crop in three years after selling at low prices for the past two campaigns.

Spain is the world's fourth-largest pork producer and home to Europe's biggest pig feed industry, which helps drive grain imports of seven million tonnes a year, or more. Northern neighbour France is a traditional grain supplier.

CESFAC estimates the Spanish feed industry's turnover grew by just 0.5% in 2010 after plunging 9% in 2009.