Grain prices remain sensitive to fluctuations in global supply and demand, despite a large carryover from last year’s bumper harvest, according to grain co-op Openfield (formerly Centaur and Grainfarmers).

It predicts that globally 30-35m tonnes will be carried over into the 2009/10 campaign, with particularly large surpluses in the USA and Black Sea regions. However, reductions in plantings and lower yields for the coming harvest mean that production is expected to be well down, keeping markets finely balanced (see table, right).

“Of the overall build-up in global stocks, about 28m tonnes is in key exporting regions,” Openfield head of wheat and feed barley desk David Doyle said at an official press launch of the newly-formed co-op. “That carryout should compensate for the expected decline in production this year, but markets will be sensitive to any major reduction in production (such as flooding or drought) and/ or serious downturn in demand.”

The UK was on track to move 3.7-3.8m tonnes of its 4mt exportable surplus, due in part to favourable exchange rates and “opportunistic” shipments to buyers in the USA and China, he added. “When we started the 2008/09 campaign with a 4mt surplus, we had to be aggressive to go out and sell the surplus. Looking at the size of our crop this year, the UK will be more of a market follower and will need outside influences and correct price structure to alter the supply and demand balance.”

But with commodity markets so vulnerable to outside influences, such as the weather and government policy intervention, grain flows and price volatility would become more erratic, he said. “Opportunities to maximise returns should present themselves, but don’t take your eye off the ball. Marketing grain is a full time job and a marketing season is not just 12 months.”