As harvest 2016 kicks off, what is the mood in the grain market today?

It’s difficult to be optimistic right now. For grain growers, prices remain low and early indications are showing that yields are not as good as last year and closer to normal trend line yields. Grain users are also concerned as output prices are low for all grain-consuming sectors.

What is driving current grain prices?

The current price for November dried wheat is €157/t. Dried barley is €10 lower. There is simply too much grain and unless the world can find some way of slowing down production, low prices will remain. In order to keep up with demand, we need to grow production by 1.8% per annum, but we are currently growing at 2.8%. This is now the fourth year of stock building.

What will it take to turn grain prices?

In the short term it will take a weather event. But this could be shortlived given current stock levels, if it is a once-off weather event.

When do you see prices improving?

Current stockpiles will provide a cushion for short-term issues. So realistically it looks like growing season 2017. It may be the market that will do the job of supply management as marginal producers get pushed to the sidelines.

What is the biggest threat for the Irish grain farmer?

With poor producer margins in Europe, continued expansion by low-cost producers, in emerging exporting regions such as the Black Sea and South America where they have lower input costs, is a major concern. Despite relatively low yields, these regions have large land banks and weak currencies which allow higher local prices.

What is needed to support the Irish grain farmer?

Ultimately the grower needs a higher price but it looks like we are in a low price environment for the next four to five years. Without some kind of political intervention at European level, to either curtail production or provide further direct support, the future of the European grain farmer is under threat.

Will we see a move to non-GM feed stuffs in the future?

This is happening in places like Denmark. In reality non GMO leads to higher feed prices. For example, non GMO soya is c. €100/t more expensive while non GMO maize is €25/t more expensive.