31 July 1998

Market comes to life as cereal prices stay low

By Robert Harris

LOW cereal prices are now tempting some consumers in to the market.

But demand is still limited and those winter barley growers who do not need the cash are storing crop, knowing that buyers will have to compete with intervention come November, says Robert Leachman, of the Malting Barley Company in Melksham, Wilts.

Brewers have been paying £75-£85/t for Halcyon and Pipkin. "That may not look much on paper, but it is a hell of a premium in percentage terms," says Michael Banks, of Banks Agriculture, Sandy, Beds. Regina, Fanfare and other newer varieties are not selling so well, he adds.

Feed barley markets have been shored up by some UK trade, catchy weather and demand from Ireland, which has yet to start harvest. Values are typically £60-£62/t ex-farm. "Very high kilo-weight samples may be worth more," says Mr Banks.

Growers with wheat already in the barn should watch for a weather market, he adds. "There is quite a bit of demand next week which could remain unsatisfied if the catchy weather continues."

Spring barleys are generally a week away in the south. "Malt exporters are sitting back and waiting for these. They are waiting to see how the quality in Scotland shapes up. Scandinavia has had similar cloudy weather and if that produces lower yields, then the European market could become tight," he says.

German yields appear to be down, says Mr Banks. "It usually takes the Danish surplus and if Denmark has a rough time that could stoke things up a little."

Export maltsters remain quiet. Roger Woodley, of Bairds, says his company will not be rushing to buy. "We are particularly tight on room at the moment. And there is excess capacity in the industry in the short term, uncertainty in the Asian market and we do not know what export restitutions are doing. There is also a lot of crop yet to be harvested in Europe."

&#8226 The EU has granted an export subsidy of 30ecus for 217,000t of wheat, the highest award this year both in subsidy and tonnage. It values French wheat at about £56/t, which, coupled with a falling world market, has further pressurised prices and reduced UK competitiveness to about £3-4/t on coasters.

The move is thought to have been triggered by last weeks 2.2m tonnes of wheat that the US has earmarked for food aid. &#42