Promising signs for new season crop

Price and yield prospects for new-season wheat, barley and oilseed rape look to be holding up well as the European harvest gets under way, say traders.

Barley harvest has started in France and parts of Germany, with yields apparently up on last year and quality in line with expectations, Glencore‘s Nick Oakhill said.

“Harvest prices still look good [see table], but the biggest thing that could put downward pressure on UK prices will be crop quality. If we get good weather and quality, it puts us in a healthy position for selling the expected 3m-tonne exportable surplus. But if we get a poor run, that surplus will have to compete with cheap supplies from eastern Europe and the Black Sea regions.”

Harvest

With the European barley harvest under way and the UK expected to start in some south-eastern areas next week,
traders are optimistic about prospects for new-season crops

Wheat production across the EU-27 was likely to hit 130m tonnes, compared with 111m tonnest last year, David Sheppard of Gleadell said.

“There will be some rebuilding of world stocks by 15-20m tonnes, but if all crop predictions come in, we will see prices come down.” Barley production was expected to be 5.6m tonnes, up 0.5m tonnes on 2007/08, leaving an exportable surplus (malting and feed) of just under 1m tonnes, he said.

Ongoing speculation over crop size and quality around the world was likely to cause further price volatility, especially early in the season, added David Doyle of Grainfarmers.

“You have to accept the volatility is there and take advantages of any rises by locking into a price that makes the business profitable.”

UK crop expectations

 

Expected crop (tonnes)

Change on 2007/08 (tonnes)

Harvest price (ex-farm)

Wheat

16.5-16.75m

+3.4m

£130-135/t

Barley

5.6m

+0.5m

£125-130/t

Oilseed rape

1.9m

-60,000

£347-350/t

 

But independent grain trader Malcolm Lyons reckoned more growers could be eager to move crops earlier to help cover cashflows stretched by high fuel and fertiliser bills.

“Price prospects look good, but farmers need it with the cost of production for wheat near £125/t in many cases.” He expected barley harvest to start in parts of Hertfordshire next week.

Milling wheat premiums were good at about £20-25/t over feed, but with lots of Class 4 varieties in the ground he was concerned mills could use large volumes of Class 4 wheat, bolstered with imported Canadian grain. “If I was a Class 1 grower, I would try to lock into a minimum premium, to at least put a base in the price you’ll get.”

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