Market reports from this week’s Prices and Trends section of Farmers Weekly:
Grain market report
Grain prices have fallen sharply this week, on the back of harvest pressure and poor weather across Europe.
London’s November wheat futures fell by more than £7/t in the week to Tuesday, leaving ex-farm feed wheat worth just £91-£95/t. With harvest delayed by the wet weather, some buyers are paying up to £5/t premium for old crop wheat in early August, but as-available values have dropped to £87-£90/t ex-farm.
Rain is also sparking concerns over grain quality. “All is not lost but a settled period of weather is urgently needed,” says Glencore Grain‘s Hugh Schryver. “All this leads to expectations of a larger supply of feed wheat within the EU, in competition with UK supplies.”
However, concerns over quality have been supportive to milling wheat premiums, which have held firm at about £40/t for full-specification Group 1 varieties, and up to £10/t for soft wheat.
Oilseed rape markets have also plummeted this week, amid news of heavy yields across Europe. The French oilseeds office has increased its crop estimate to a record 5.2m tonnes, and early indications of British yields are better than expected. With ex-farm prices now at about £202/t for harvest, and a good carry to November, very little is being traded, say merchants.
Meat market report
Deadweight lamb prices appear to have slipped again, with R3L carcasses down 6.5p/kg on the week at 316.8p/kg, the ninth time in 10 weeks the trend has been downwards.
Continued weakness of demand is the main reason, with the nation’s barbecues stuck firmly in the shed as the dismal summer weather continues.
But demand for lamb has fallen throughout the year. Latest figures show that, in the first six months of 2009, the volume of lamb consumed was down by 7% on the same period last year. Overall expenditure was more static, however, due to a 10% rise in the average retail price.
Analysis by the Livestock and Meat Commission in Northern Ireland highlights the extent to which the sheep industry is becoming dependent on the Easter market.
This year, for example, April (the Easter month) accounted for 25% of all sales in the first half of 2009, with demand falling sharply thereafter. Furthermore, the peak was more extreme this year than either 2007 or 2008.
“It is a concern that the seasonal swing in demand has become more manifest, as the entire industry would benefit from greater stability,” says the LMC.
Dairy market report
Retailers are failing to pass on reductions in the price of bulk butter to consumers, despite an increase in the number of in-store promotions.
DairyCo points out that, since prices peaked in September 2007, bulk butter has dropped by almost 39%, while the retail price is still some 15% higher.
“When commodity prices originally increased, retail prices were much quicker to react compared with increases to farmgate prices,” it says. “Despite commodity prices falling, retail, prices do not appear to have reduced in line.”
Last week the EU Commission cited this failure to pass on commodity price falls as a main reason for the continued slump in the dairy market, with higher retail prices keeping a lid on demand.
Meanwhile, butter values continue to drift on world markets, while in the EU they are pegged at just above intervention levels. There is some concern that the imminent releases of butter, held under the EU’s Private Storage Aid scheme, will push prices lower.
For more market information go to Prices and Trends