The latest Tillage Edge Podcast looks at the prospects for international grain prices over the coming months.
The broadcast includes Teagasc’s Michael Hennessy discussing these matters with Phelim Dolan from Comex McKinnon, a leading Irish cereal importing and exporting organisation.
Michael pointed out that grain prices remain at historically high levels, as supply pressures continue to drive sentiment.
There is a constant stream of news now available regarding crop planting, establishment and health figures. In tandem with production estimates, all of these projections are driving grain prices in the one direction – upwards.
International grain prices
It won’t come as a shock to learn that the war in Ukraine is having a huge influence on prices at the present time.
But as Michael Hennessy pointed out, grain supplies were already tight prior to the start of the war.
Coming closer to home, a number of Irish cereal growers sold their grain forward this year – and may well be regretting this move.
However, the prospect of ever increasing prices for the remaining grain that they have in store, will ease this situation to some extent.
Dolan started by reviewing the state of world cereal markets prior to the outbreak of hostilities in Ukraine. He confirmed that bullish trends were already becoming apparent at that stage.
“Demand and supply had been tightening from 2021 into 2022,” he explained.
“But when the Russians invaded Ukraine on February 24, the market really took off at that stage. Prior to that, the market had been nervous, given the prospect of some form of action in Ukraine.”
According to Dolan, the market for wheat strengthened by €20/t in the days directly prior to the invasion.
“The demand/supply situation as already pretty tight at that stage in any event,” he explained.
“And the market was extremely nervous of any event that would increase prices. Ukraine is not the largest producer of grains and oilseeds in the absolute sense of the term.
“But what makes is so important in a global context is the fact that the country exports such a high proportion of the its cereal output.
“Maize and wheat exports are very large contributors to the Ukrainian economy. Barley exports from the country are also significant,” he added.
“For the most part, these grains are exported to the Middle east and north Africa, regions that have a tremendous import demand for these products.
“So any diminution in Ukraine’s ability to export grain has a major ripple effect around the world.”