Germany's 2008 grain crop bumper harvest will see a dive in prices as the use of wheat in animal feed is expected to increase along with its price drop.

In a November report of the US Department of Agriculture, German farmers in 2008 produced a near record grain crop estimated at 49.9 million tonnes due to a larger production are at 7.05 million tonnes. The harvest in 2007 was 40.6 million tonnes.

With the large harvest, grain prices have nose-dived in the recent months. Prices have dipped by EUR40-60 per tonne compared to September 2007 and could take a further plunge as farmers are hard of cash to buy seeds and fertilisers.

Feed wheat is also fetching lower prices as it is competing with a glut of other surplus grain crops.

Due to the bumper wheat harvest in 2008, the use of wheat in feed is expected to climb again replacing sorghum, corn and tapioca imports from non-EU countries.  It is also expected that an increasing amount of low quality feed wheat will be processed in ethanol plants.

For the full USDA report, please click here