UK Outlook 2009: markets remain stable

“The markets will remain volatile, especially as far as wheat is concerned because it is grown mainly in the northern hemisphere and so there is only one crop a year. Speaking at the UK Outlook 2009 conference in London on April 8, Home-Grown Cereals Authority (HGCA) market expert Heike Hintze-Gharres pointed out that while record harvests last year had led to greater availability and lower feed prices, the world’s reserve stocks were still being rebuilt and growers had experienced “difficult conditions” at planting for the 2009/10 harvest, with higher input costs in concert with the international economic downturn. This resulted in the world wheat area planted falling by about two million hectares to 222 million hectare, compared with last year.

Ms Hintze-Gharres, who is manager of the market analysis team at the HGCA, said the EU wheat and maize area for 2009 was also down by about 2% and the actual wheat production was expected to fall by about 7%. Meanwhile, the world’s 2009/10 wheat crop in was expected to fall by some 37 million tonnes below last year’s record harvest to 651 million tonnes.

However, the long-term demand for grains and oilseeds was likely to rise substantially, due to world population growth and rising demand for biofuel markets. In addition, world markets were still vulnerable to volatile crude oil prices and future currency fluctuations, as well as the weather.

“The markets are not out of danger yet and the future remains very uncertain, so all producers should ensure they stay on top of markets – and take out adequate risk management measures to mitigate against any sudden price increases,” she told the conference, which was organised jointly by the British Pig Executive (BPEX) and the English Beef and Lamb Executive (EBLEX).