By Robert Harris
FRENCH farmers are heading for a record wheat and barley crop which, combined with lack of export opportunities, is driving prices down and keeping the lid firmly on UK values.
UK feed barley remains at about £60t ex-farm. Feed wheat is worth £3-4/ t more, and there is little sign of change, say traders.
ONIC, the French national cereals office, is predicting wheat and barley output will top 49 million tonnes, over 7% up on last year. Quality is also said to be good.
French prices are coming under pressure as a result, says Dalgetys Gary Hutchings. “French wheat is trading at intervention levels basis Rouen. That means it is worth £5/ t less inland, about £68/ t ex-farm. That rattles back into the UK – prices have to be about £5/ t lower on a fob basis to compete.”
Mike Adams of Banks Agriculture shares Mr Hutchingss concerns. “Unless the EC starts exporting to world markets, we will all be competing in the same European pond. All that will do is depress the price.”
Export opportunities that close to home appear to be limited. Most of southern Europe has reported a good harvest, apart from Portugal, which has had a disastrous time.
The Confederation of Portuguese Farmers reckons wheat output has plunged to 50,000t, compared with a five-year average of just under 400,000t. And the national barley crop is put at 20,000t, 28% of normal. But the French look favourites to pick up the business.
Further afield, the picture is equally bearish. The Chinese report a 13m-tonne wheat shortfall, but a big maize crop should make that up. Russia reports a similar reduction, but poor meat will cap grain demand.
The EU Commission appears keen to export the large amounts of cereals held in intervention stores, which is also pressuring prices. The EU Management Committee recently granted licenses for 300,000t of UK intervention barley, part of a 1m-tonne package from six member states.
News that the USA is to make available 2.2m tonnes of wheat for distribution to needy countries (and to raise US farm gate prices ahead of congressional elections) will not help, adds Mr Adams.
Malting premiums are sticking at £10-15/ t over feed, for those that can find a buyer, notes Mr Hutchings. Maltsters are keen to take in contracted barley before turning to the open market.
Many crops have low to medium nitrogen values, a legacy of the wet season. The flip side is that some samples are suffering low bushel weights, 63kg/hl or below, and screenings of 12-13% are common.
Typical ex-farm prices remain at about £147/ t. Oil contents look good, with typical values about 42%, worth £4-5/ t, he adds.