It is unlikely that grain markets will move downwards from their current highs in the short-term at least as global supplies remain tight, according to grain trader at R&H Hall Philip Lynch.
This is because the current high input costs associated with growing grain are putting farmers off increasing their production to the extent they might have during previous periods of high grain prices and pushing prices down with larger supply volumes.
Stocks of feedstuffs are also not as abundant internationally as they were in previous years, Lynch said.
Global availability of cereals and soy is down due to the US harvest being lower than anticipated, the impact of summer drought in Europe and the impact of adverse weather in South America, the trade told farmers and pig sector stakeholders.
“It is very, very unlikely that we will see any significant downside, unfortunately, in grain prices in the short-term at least,” said Lynch.
“In any high price year going back in time, growers would see that high price as an incentive to grow more and you get more acres in the ground. When those crops come to fruition a year later, that extra supply will weigh on prices.
“But the difference this time around is that with energy costs, fertiliser costs, input costs, growers aren’t really seeing the higher prices in terms of really good margins encouraging them to grow acreage.
“That's a big difference in terms of this upside cycle and what would usually happen. That’s a reason why even new crop grain prices might stay and probably will stay more supported than you might otherwise expect or have experienced in previous cycles,” he said.
Lynch’s comments were made at the Teagasc pig conference on Tuesday in Cavan. The same speakers will present on Wednesday 19 October from 2pm to 6pm in the Horse & Jockey Hotel, Co Tipperary.
€400,000 in accumulated losses
IFA pig chair Roy Gallie told the conference that the pig price situation shows no signs of easing, as the average-sized pig herd is set to hit losses of more than €400,000 early in the new year.
This is despite most farmers receiving €120,000 in supports under the two Pig Exceptional Payment schemes opened to them by the Department of Agriculture earlier this year.
“We are continuing to haemorrhage money, between 10c and 20c/kg. Simple maths on a 100kg carcase shows that we are losing €20 per head,” he said.
“We in IFA are in the middle of a full round of meetings with processors and the retail. The news I have for you so far is not great, for the short-term at least.”