It is with a benefit of hindsight that the following observation can be made: contrary to the meaning the market puts into the set phrase 'harvest pressure' an interesting occurrence was noted during the harvest of grain in the EU this year: lowest prices for barley, wheat and now for corn traded prior to the start of the harvest and the actual harvest pressure, reported Natalja Skuratovic, Senior Commodity Trader Agri-Business, Raiffeisen Waren-Zentrale Rhein-Main eG (RWZ).
Key factor in mitigating the harvest pressure was the weather. Intermittent rains led to continuously disrupted harvesting in case of barley and later wheat. It allowed the farmers to store piecemeal quantities coming off the fields before the next bout of harvesting. Thus, less grain ended up coming to the market directly off the fields and pressuring prices.
Corn, the harvesting of which is now at the order of the day, did not ripen earlier than usual following the heatwave this season in France, Germany, Hungary and Austria. Market was wrong to expect harvesting of corn to start before mid-September. Now corn is finally ripe and the stable weather allows farmers to progress with harvesting steadily. Still, quantity of corn, harvested until now, remains very limited. French cooperatives reap the benefits of delayed harvest by pocketing the premium for mais précoce (early corn) to feed the 'hungry' market which had to wait for corn longer than was accounted for. After the premiums are creamed off the farmers prefer to switch to the harvesting of sunseeds and soya. Good weather makes the farmers hopeful to leave the corn to dry in the fields, thus, saving some serious money on drying costs. It has been observed in previous campaigns with corn left to dry in the fields until December, so there is nothing unusual about that. However, it gives rise to possible quality concerns later on (DON, mycotoxins, etc). All eyes are on the weather. A rain here and there should not be problematic. Forecasts are looking promising and the farmers are willing to take their chances.
Market is apprehensive of this development. The spread between the deferred positions in French interior, for example, has gradually narrowed in the course of last month from its peak of 10 EUR/t to 5 EUR/t now. It does not help that the buyers of the cheap ex harvest corn are the coops themselves who buy back their earlier sales of cheap ex harvest corn after selling premium early corn on the spot market. This is making the offered side particularly thin. Clearly, the discount is not there to stay as, incidentally, French corn on October position is the best calculation to the animal feed producers in Belgium, Germany and the Netherlands in the absence of competition from Brazilian and Ukrainian corn, which will not be available for another month or so.
About the company
The RWZ is the third largest central agricultural cooperative society in Germany with a turnover of 2.4 bln EUR in 2015 and 3,300 employees at 200 sites. It is a business partner of more than 70,000 farmers, viticulturists, horticulturists and of nearly 150 member cooperative societies. RWZ offers a wide range of products and services under one roof.
Natalja Skuratovic is a Senior Commodity Trader Agri-Business at Raiffeisen Waren-Zentrale Rhein-Main eG. Previously she worked in Cairo Three A & A One Import & Export S.A.E., Glencore Grain, and Philips.
At the second conference "Grain exports from Ukraine" she makes a report “Trends on the global and European grain markets in 2017/18 MY”. You can meet the expert and ask questions about the European grain market within frames of "Grain exports from Ukraine", to be held in Kyiv, Ukraine, on November 2, 2017.
