Grain Update – 13 July 2011

  • New and old crop grain prices remain extremely volatile as Russia returns to the market heavily

discounting new crop values by between $30 to $40/t. SovEcon raised production forecast to close on 90mt for this year’s Russian harvest up from 61mt last year. Favourable growing conditions across Russia and Ukraine will see a return to good yields in this region. To date Russian yields are 23% ahead of last season. However current wet weather in Ukraine is disrupting harvest.

  • There has been a significant slide in new and old crop values in recent weeks as hedge funds

divested heavily of contracts. Old crop wheat is back €20 in the last month, trading from €218 to €220/t with barley at €200 to €204/t. New crop values for dried grain for October are from €193 to €195/t for wheat and €188 to €191/t for barley. However the latest USDA report has stopped the slide as anticipated production increases particularly for maize are considerably lower than market expectations.

  • This year’s world wheat production for 2011/12 is estimated at 662.42mt (648.24mt 2010/11)

Global wheat consumption is seen higher at 670.20mt(656.57mt 2010/11) as livestock feeders switch from expensive maize to cheaper wheat,

  • Despite an expected increase in world maize production for the coming harvest (873mt vs. 820mt in

2010/11) growing demand particularly from China will see consumption continue to rise again this year (878mt vs. 843mt in 2010/11). The continuing tight stocks to use ratio of 13.2% will be the keyprice driver for feed grains for the coming season.

  • World soybean production is forecast at 261mt (264mt 2010/11). The latest USDA report is seen

as neutral to soya values as it is too early to call yield. However, overnight values rose on the back of higher corn and wheat prices.

  • The June price has been set for this year’s malting barley pricingmechanism:

Option 2 / Weighting / Price Basis / Position / Weighting / Price
75% / CIF Feed Barley Prices / March* / 20% / €214
April* / 20% / €197
June* / 20% / €204
Aug** / 40% / €194
Average CIF Feed Barley Prices / €201
Less adjustment factor / €30
Plus Malting Barley Premium / €20
Feed Plus Basis of Calculation / €191
25% / Malting Barley FOB Creil / Aug** / 100% / €240
Forecast Harvest Price*** / €203
Notes
* / Calculated average prices from third party sources
Estimated average June price (requires third party validation)
** / Todays forward market prices
*** / Todays forecast harvest malting barley prices at 20% moisture excluding moisture/screenings
Adjustments
  • First reports from the winter barley harvest suggest variable yields ranging from 2.5t to over

4t/ac. Not enough has been cut to date to give an overall trend. In general bushel weights are excellent with the majority of samples ranging from the mid sixties to 70kph.

Table 2. Irish Harvest Production Forecast (Range)

2010 / 2011*
Min / Max
Crop / Area (ha) / Area (ha) / Yield t/ha / Production (tonnes) / Area (ha) / Yield t/ha / Production (tonnes)
S Barley / 130,894 / 137,000 / 6.20 / 849,400 / 140,000 / 6.50 / 910,000
W Barley / 25,682 / 34,000 / 7.30 / 248,200 / 35,000 / 7.90 / 276,500
Sub total Barley / 156,576 / 171,000 / 1,097,600 / 175,000 / 1,186,500
S Oats / 8,373 / 7,000 / 6.40 / 44,800 / 8,000 / 6.60 / 52,800
W Oats / 9,007 / 6,500 / 7.93 / 51,545 / 7,500 / 8.20 / 61,500
Sub total Oats / 17,380 / 13,500 / 96,345 / 15,500 / 114,300
S Wheat / 15,714 / 20,000 / 7.20 / 144,000 / 22,000 / 7.50 / 165,000
W Wheat / 54,014 / 75,000 / 9.40 / 705,000 / 75,000 / 10.10 / 757,500
Sub total Wheat / 69,728 / 95,000 / 849,000 / 97,000 / 922,500
Total Cereal / 243,684 / 279,500 / 2,042,945 / 287,500 / 2,223,300
2010 / 2011
Total cereal harvest / 1.767mt / 2.04 - 2.22mt

Noel DelanyFintan Conway

ChairmanExecutive Secretary