Wheat prices to soar over low stocking levels in EU, experts claim

Tuesday, April 19, 2011

WHEAT prices look set to soar to record levels this year due to anticipated low stocking levels in the European Union, the world’s largest wheat producer.

Industry experts predict the price will remain high for the remainder of 2011. Milling wheat traded on the NYSE Liffe exchange in Paris, the European benchmark, averaged €252.20 a ton in the first quarter, the second highest price since 1999. It fell by around 1% to €238 yesterday, but looks sure to trade at €220 to €250 over the next year.
French agri-analysis firm Offre et Demande Agricole is advising its 5,000 French farm members to sell crops, according to Bloomberg. Prices may reach €300 should crops fail in one of the bigger producers, it advises.
France’s crops office, FranceAgriMer, has increased its estimate for soft-wheat exports outside the EU in the 12 months to June to 12.75m tons from 12.6m tons.
Meanwhile, the US Department of Agriculture predicts global wheat stockpiles will drop 7.6% to 182.8m tons at the end of the 2010-11 trading year.
Rain last autumn slowed the planting of winter wheat, which accounts for 95% of the EU’s wheat crop, leaving acreage little changed from a year earlier.
While better yields will boost output by 5% to 141.4m metric tons, that may not be enough to rebuild the EU’s stockpiles, which its experts estimate will slump by 19% before the end of June.
The European farmer representative group Copa-Cogeca, of which the Irish Farmers Association is a member, said that this wheat shortfall serves to remind food producers of the importance of independence of food security for the EU’s 27 member states.
Meanwhile, Copa-Cogeca also noted that a newly published EU report on nitrogen emissions similarly highlighted the need to keep food security to the forefront in the continent’s future environmental strategy.
The EU report highlights the vital contribution of nitrogen to agricultural productivity and to maintaining EU food security. The farm group said that this issue is more important than ever given that world food demand is expected to more than double by 2050.
Copa-Cogeca secretary-general, Pekka Pesonen, said: "This study confirms that food security is crucial for Europe and that the only way to achieve this is to support an efficient, productive agriculture sector.
"The report also shows that the agriculture sector is much further ahead than other sectors in reducing its green house gas emissions, with a 20% fall in emissions seen in the EU agriculture sector over the period 1990 to 2007.
"Some 70% of nitrogen emissions, which have been identified as the most costly to society, come from transport and heating," he added.
"Furthermore, Copa-Cogeca EU farmers have reduced fertiliser consumption by 18% from 2002 to 2010. But in order for this to continue, European farmers need access to all technologies which improve their production efficiency. At the same time, EU farmers are being squeezed by high input prices and extreme market volatility.
"This will limit the amount of investment European farmers put into improving their business. The Common Agricultural Policy must provide a good economic framework for a modern, efficient agriculture to tackle also the nitrogen challenge."

(Source: http://www.irishexaminer.com/business/kfojkfsnaumh/rss2/)