It looks like the grain harvest will start in the south of the country sometime after the 15th of July. What originally looked like an early harvest earlier in the year now looks to be normal timing. If yields are above average, we should see a total cereal harvest around 2.2m tonnes which would be still 200,000 tonnes below the 2017 harvest but 350,000 above last years.
Anecdotal reports would suggest that a lot of barley has moved over the past month due to the rise in spot maize prices and the comparatively lower prices for barley. Heading into the new harvest the overhang of stock from last harvest may not be as high as feared earlier in the year.
Some livestock producers particularly in the pig sector have found the high inclusion of maize in diets has had a negative effect on animal performance and are actively reducing inclusion rates in order to use more wheat and barley.
Although domestic spot and future prices have remained higher due to the planting problems in the US, they should be higher but are being held back by the favourable harvest outlook in Europe/Black Sea and the availability of maize from regions such as the Ukraine where prices have not risen in tandem with the US. Irish production of wheat and barley could increase by almost 400,000 tonnes compared to 2018.
The FOB Creil malting barley (July 2019) price has drifted lower to €178/t over recent days due to higher moisture levels in northern Europe which has led to favourable yield and protein level forecasts.
Native/Import Dried Prices
|Spot 13/06/19||July2019||New Crop 2019|
|FOB Creil Malting Barley||€178/t (July 2019)|
The resumption of wet weather in the US continues to drive the markets with US wheat futures now at a 6-month high. Although the EU and Black Sea wheat futures are up, they have not increased to the same extent as in the US. The USDA in its latest report cut both US 2018/2019 and 2019/2020 wheat ending stocks quite significantly. The winter wheat harvest has started in the southern US states however it has been delayed in some states and the wet weather could impinge negatively on production and quality standards. Strategic Grains has indicated that EU wheat production will be 12% higher and winter barley will increase by 15% compared to last year. Australia and Canada continue to suffer dry conditions with yield reductions expected for a second year running.
The latest USDA estimates released last Monday indicate that planting of the maize crop is only 83% complete with little progress since, due to wet conditions. The agency reduced its overall forecast for corn tonnage down to 350 million from 380 million however, many commentators feel this number is too conservative and will fall further in the next update from the State body. Corn futures are now at a four-year high and are expected to remain at this level or go higher in the near term.
The USDA reported that only 60% of the soybean crop is planted in the US compared to the 5 year average of 88%. The agency raised its estimate for year ending stocks slightly however, many believe this will be revised significantly lower due to continued delays in planting and a likely reduction in production as a result. US Soybean futures are up 13% in the past month while soya bean meal is up by 14%.
Demand for feed picked up slightly over the past week as wintry conditions returned and cattle were rehoused. The recent drop in both spot barley and wheat has also bought back some demand from the cheaper competitor grains. Although new crop prices have fallen significantly, they have at least steadied in the past week.
Demand for feed continues to remain slack as more livestock head out to grass. Due to the extended grazing season in 2018 and the good start to 2019 the anticipated demand for feed has not materialised. This combination along with the availability of cheaper imported maize and other by-products has drastically reduced the demand for barley and to a lesser extent wheat in feed rations. Some merchants and farmers have increased the flow of barley stocks from stores which is putting extra pressure on prices in the market. The only positive is that the reduced old season prices may increase demand as the price gap with maize has narrowed significantly in the past two weeks and has now reverted closer to the norm. This resetting of the barley price may now also affect planting decisions for Spring barley in Ireland and across the EU. The current situation has negatively affected new crop 2019 Irish prices with Basis November ex. store now at €183/t for wheat and €175 for barley while OSR is at €378/t.
Native/Import Dried Prices
|Spot / Feb 20th 2019||April – Jun 2019||New Crop 2019|
Volatility certainly returned with a bang to international grain markets this week with futures prices on all indices hitting a 7-month low. The Matif Mar ’19 price fell by 5% while CBOT wheat futures in the US dropping by up to 8%. Current US and EU stocks remain stubbornly high with slow export demand. When this is coupled with the forecast of increased production for the 2019 harvest, this reality has undermined markets. Some forecasters see an increase of 15 percent in wheat production in the EU from last year while the barley crop is forecast to increase by 11 percent.
The increased use of maize in compound rations at the expense of barley and wheat is a global issue and has negatively affected barley and wheat markets resulting in a narrowing of the gap between corn and wheat futures. In the case of barley, prices have been hit hard due to the good harvest prospects but also the drop-in demand from China and Saudi Arabia who are the major world importers.
There was some relief for wheat markets this morning as GASC in Egypt filled a tender for over 300,000 tonnes of wheat, of which over 50% was of EU origin. Ironically French wheat is now cheaper than Black sea origin but the anticipated cessation in Russian exports has yet to materialise. Notwithstanding these negative sentiments there are market positives as world wheat stocks are shrinking after successive years of increase and world barley stocks are at 35-year lows.
Corn future markets also fell along with wheat and barley markets but not to the same extent as they have not seen the same price increases over the past 7months. Prices have remained under check due to the continued poor demand for ethanol in the US and recent word from the USDA which lowered estimates of U.S. 2018 corn yield and production, but raised forecasts of 2018-19 U.S. and global corn.
Demand for feed remains subdued due to the benign weather conditions. Grass growth continues to remain strong and many animals are now out on grass for the time being at least. The demand for feed wheat remains reasonable however demand for barley remains weak and this is continuing to be a worry as the feeding season window narrows.