Cereal prices estimated to go down by 18% in 2019

Teagasc launched its Annual Review and Outlook 2019 this month. The review outlined some predictions for Irish cereal farming in 2019.

Assuming normal weather conditions, yields are expected to rise worldwide and – closer to home – spring barley yield is set to rise by 20%, while winter wheat is to rise by 9%.

With the rise in yields, prices will most likely go down and Teagasc estimates a drop of approximately 17% on 2018 price levels.

The rise in yields is not expected to make up for the drop in price. The report states: “The overall story for the 2019 forecast is for a decline in gross margins as a reversion to average yields.”

The return to average yields is not expected to be enough to compensate for a decline in the price of grain and straw, as well as an increase in fertiliser costs.

Input costs

As well as a drop in grain prices, farmers are expected to face a 10-12% rise in fertiliser prices.

Seed prices will also increase; largely due to the reduced harvest in 2018. Fuel prices and other direct costs, such as machinery hire, are not expected to rise.

Margins

The gross margin of spring barley is estimated to decrease by €100/ha on 2018 levels, while the gross margin for winter wheat is expected to drop massively – €400/ha on 2018 levels.

The average net margin on cereal farms is expected to drop by €200/ha. Below is a graph detailing the net margin for 2017 (actual), 2018 (estimate) and 2019 (forecast).

 

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