Currency movement is main harvest concern
Currency movement is main harvest concern
QUALITY concerns about this years harvest should not be overstated, according to the NFU, which this week presented its 1997 crop survey.
Trade and HGCA figures pointed to lower bushel weights and Hagbergs, admitted deputy president Tony Pexton. But this hid a wide range of qualities, including some decent grain, suitable for any market.
Some areas had suffered a dismal harvest. On his own farm in Yorkshire, not a single tonne would reach 72kg/hl specific weight. But other areas, notably East Anglia, had had a better crop than last year, with higher quality and increased yields. "We can see no reason at all why we cannot meet any marketing opportunities," said Mr Pexton.
This is in contrast to recent trade comments that finding enough grain to meet export specifications will be a struggle. With Spain and Portugal suffering a drop in cereal production of between 15% and 20%, and with the EU as a whole looking at a smaller crop (down 1% to 203m tonnes), the demand for UK grain would be there.
But the NFU accepts it must be competitively priced and says the value of sterling will be the main factor determining ex-farm values this season.
On the subject of currency, the NFU is reasonably optimistic, having seen an easing of sterling in recent weeks and a consequent rise in ex-farm prices (see graph).
While it was impossible to predict currency movements, a softer line from government towards the single currency was helping. "If we can get a clear signal about joining the Euro, the expectation will be for interest rates to fall and, as that feeds in, that should help reduce the value of currency," said NFU economist, David Legg.
As for the volume of grain available, the NFU survey is slightly above trade estimates. Increased area, but much lower yields have combined to cut wheat output 5% to 15.24m tonnes, it says. Barley production is more or less unchanged at 7.81m tonnes.
With enough grain of sufficient quality, traders should not need to increase imports of milling wheats either this year, said cereal committee chairman, Peter Limb. "We can supply the quality they require later in the season," he claimed.
And he denied that farmers had any responsibility to release grain early to overcome trade short positions. The farmers marketing decision was an individual thing and he had no moral obligation to supply the market until he thought the price was right.
But these claims have been disputed by merchants. "It is totally untrue to suggest imports wont rise," said John Duffy of Gleadell Banks. "Millers are bringing in more grain for two reasons. First, they cannot extract enough of sufficient quality from the UK crop. And second, the strength of sterling makes imports cheaper."
As for exports, he agreed that all surpluses would find a market. But much of it would not make human consumption quality and would have to be priced in to the more limited feed export markets.n