August 10, 2011

 

Europe's grain prices plummet on EU debt crisis

 

 

The EU debt crisis ignited a substantial sell off of all commodities as investors discarded riskier assets in favour of secure havens such as gold, thus, causing grain prices to plunge last week.

 

Only fears of an unusually tight carryover stock of world corn, which is currently 25 days or less, kept a floor in the grain market and supported prices.

 

Cereal prices fell significantly on Thursday (Aug 4) and Friday (Aug 5), with new crop dried barley trading down EUR4/tonne (US$5.74) to EUR190/tonne (US$272). Wheat was more resilient, holding at EUR194/tonne (US$278) despite London futures falling by GBP4.50/tonne (US$6.46).

 

Prices for new crop dried Irish barley closed the week at EUR190-192/tonne (US$273-275), with EUR192-194/tonne (US$275-278) on offer for harvest wheat.

 

Green offers for barley are ranging from EUR158-160/tonne (US$227-230) in the southeast to EUR168.50/tonne (US$241.73) in the midlands, east and northeast for grain at 20pc moisture, excluding VAT.

 

Grain traders are also waiting for the latest USDA crop report on US corn stocks, which is due on Thursday (Aug 11).

 

High corn prices would support feed wheat and barley prices across the world as livestock producers switch from more expensive corn to cheaper cereals such as barley and wheat.

 

IFA grain chairman Noel Delany said the only advice he could give farmers this week was to consider price offers at EUR160/tonne (US$230), excluding VAT, or above for green barley at 20pc moisture.

 

"The ongoing eurozone crisis, coupled with harvest pressure, will increase grain price volatility in the coming weeks," he warned.

 

"In addition farm-to-farm trade offers a real opportunity to growers for increased margins."

 

The first of the spring barley has also been cut, with Carlow farmers reporting that protein levels for malting barley were on the low side and similar to last year's levels. Bushel weights are excellent, ranging from 65-69kph, but not enough of the crop has been harvested yet to give any firm indication of average yields.

 

Much of the winter oilseed rape crop has also been cleared at this stage, with varieties such as Excalibur yielding 2-2.4t/ac at moistures as low as 9pc in the northeast.

 

Prices eased a bit last week as the European harvest exceeded yield expectations. Prices are ranging from EUR385/tonne (US$552) at 10.5pc moisture to EUR405-415/tonne (US$581-595) dried.

 

The winter barley harvest is now coming to a close, with an average yield of 3.4-3.5t/ac, although individual crops ranged from 2.6t/ac up to over 4.7t/ac.

 

Bushel weights in general were excellent, ranging from the mid sixties to the low seventies.