The grain market is likely to remain in the duldrums until at least spring 2015, according to HGCA lead analyst Jack Watts.
“The world is in a very comfortable situation when it comes to grain, particularly feed grain,” said Mr Watts following the cereals levy body’s grain market outlook conference in London yesterday.
“The world has had another big harvest of grain and that has given no cause for concern over supplies in the near term, giving rise to some very depressed grain prices.”
That said, the market is fully aware that global grain demand will continue to grow year on year, and according to Mr Watts “we are only ever one weather event away from not producing enough grain to meet demand”.
He said the futures feed wheat price – currently around £110 a tonne – was unlikely to reach pre-harvest levels of £140 to £150 a tonne.
“We are dealing with prices now that we have not seen for four to five years. The markets seems to have stopped falling for now, but it’s difficult to say whether we have reached the bottom,” added Mr Watts.
He said prices were likely to remain subdued until spring when the market starts to work on next year’s crop.
“The trick with marketing crop that’s in store now and needs to be moved will be watching the market very closely for mini rallies in price led by global demand,” added Mr Watts.
“The low prices may very well start to stimulate demand.”
The barley market on the other hand, said Mr Watts, was more buoyant with a smaller global crop produced this year.
He said growers should expect more volatile malting barley premiums in the future, and said a dry spring down south could result in increased premiums for Scottish grown barley as the weather would result in English barley with a higher Nitrogen content.
How growers, particularly those in Moray and the north-east, chose to react to the three-crop rule under Common Agricultural Policy reform would change grain market dynamics significantly, added Mr Watts.