Almost as quickly as the first combines emerged from their winter quarters to cut the first barley of the season, the rains arrived and they were hurriedly put away again.
Perhaps it was the Royal Show, which has become almost synonymous with bad weather, or maybe the start of the Ashes series was to blame. Either way, this week's weather has been more like winter than summer and little, if any, barley has been cut.
Looking at the way the grain markets have been going in recent weeks, many growers may be hoping for a slightly longer rain delay - anything to tighten the market and give prices a boost.
That is likely to be wishful thinking and, with weather prospects improving for the second half of the week, the chances are more barley will be cut in the coming days.
According to the Farmers Weekly roundup, spot prices for barley today are just £77/t. That is way below the cost of production and unlikely to tempt anyone to sell unless they are absolutely desperate .
There have even been reports coming in of farmers erecting temporary grain stores in their farmyards to make room for new crop without becoming forced sellers of their 2008 leftovers...
So long as these facilities are up to scratch and don't cost too much, such delaying tactics make good sense. For, while there is nothing to get too excited about with regards the new crop, there is still some price "carry" into the new season.
Sterling has also weakened in recent days to 86.5p/euro, aiding the UK's export competitiveness.
And French analysts Strategie Grains has downgraded its total 2009 EU barley estimate from 61.3m tonnes in March to 59.7m tonnes in July, as Spain reports a smaller than expected harvest.
It seems there is at least a bit of upside in the barley market, though feed grains are unlikely to do anything spectacular over the coming months with so much US maize in the ground.
For wheat, too, the world is looking at the second biggest crop of all time and, with a similar big carryover of old crop, prices are likely to struggle.
Analysts Rabobank probably have it right when they describe current prices as "reflective of their fundamental fair value". The 30% market rally in May was decidedly overcooked, and the recent downturn is more in keeping with the fundamentals of supply and demand.
Of course there will be volatility in the market for all grains, especially as speculators come and go from the paper markets and a possible El Nino weather pattern develops in the southern hemisphere.
The trick this season will be selling into the upswings and avoiding the downturns.
* For more Harvest Highlights click here. And to subscribe to this blog, click here.
| Tweet |
|

Leave a comment
Want a user icon? Get a Gravatar!