Cereal volatility here to stay

PRICE VOLATILITY is to remain a key feature of world and UK cereal markets for the foreseeable future, growers have been warned.

Producers must take steps now to protect against price moves of up to £50 per tonne, according to the Home Grown Cereals Authority.

“There will be more volatility in the future, therefore we must start protecting a lot more than in the past,” said the HGCA‘s Economist Julian Bell, speaking at their Market Outlook conference on Wednesday (Oct 6).

“This year is not the last time we will see £50/t price moves.”

Increased output across the EU means there is a lot more wheat on markets this season, but the UK is one of the few European countries to have suffered with major quality concerns, he said.

“We cannot compete on the world market with feed grains this year. We are losing market share to imports – the clock is ticking.

“Our feed wheat prices are vulnerable to quality issues and we must factor this into our planning,” he added.

He urged growers to think about securing prices for some of their crop before planting, citing the futures market as one example of how to do this.

“If prices are high enough to sow, they are high enough to sell.”

Commenting on this year‘s oilseed market, Mr Bell said producers of oilseed rape must learn to follow the world soyabean crop more closely, as this can have a big impact on domestic markets.

South America is now the largest producer, with a 100m tonne soyabean crop in 2004, he said.

A record oilseed rape crop in the EU this year at just under 15m tonnes, has left a 1m tonne market surplus, he explained.

“We [the EU] don‘t have enough crushing capacity to take anymore OSR; we must find a home for this surplus.”

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