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.
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.