FARMERS throughout the EU are anticipating a better than average cereal harvest, with the latest estimates putting the total crop possibly as high as 294 million tonnes compared to last year's 255 million tonnes.
This would represent a 17 per cent increase in wheat production at almost 130 million tonnes while maize output could rise by 25 per cent to 59 million tonnes, with barley jumping by more than five million tonnes to 61 million tonnes.
However, t
here remains huge uncertainty on the international front, largely as a result of weather conditions. In Italy about 30 per cent of the wheat has already been harvested, but quality is no more than average. In Spain heavy rain has delayed the progress of combines by at least two weeks.
World stocks remain on a knife-edge. The International Grains Council has revised its forecast of world wheat production upwards by eight million tonnes to 658 million tonnes, but maize output has been downscaled by seven million tonnes to 756 million tonnes while consumption is predicted to reach a record 782 million tonnes.
The net result of this in respect of maize is that end stocks at a projected 97 million tonnes will be at the lowest level since 1983. This is clearly concerning traders, with the Chicago futures for maize for December 2008 moving up by $12.40 to a record of $463 per tonne.
UK wheat crops generally look promising, but much will depend on the July weather. Parts of England have reported a distinct lack of rainfall, but high humidity levels are encouraging foliar diseases, necessitating additional crop spraying.
Chinese buyers are watching the markets very closely and if the US dollar remains weak against the euro some big deals are likely.
However, with the cost of oil now over $140 per barrel, shipping costs are likely to be appreciably higher.
The full article contains 317 words and appears in The Scotsman newspaper.
