Scottish Malt prices go over 8.00

[mcfarms]

Read the second comment right at the bottom of the article with todays exchange it works out to $8.36 Canadian in Scotland for Malting barley.



Sunshine welcomed as farmers set to reap growing cereal profit
DAN BUGLASS
RURAL AFFAIRS EDITOR (dan.farming@virgin.net)
THIS year's Scottish cereal harvest is proceeding well, especially over the past few days when the weather has generally been favourable throughout most of the principal arable areas in Scotland.

Farmers certainly have something to smile about this year, with prices at or near to record levels. The Home Grown Cereals Authority in its latest weekly bulletin reported that a consignment of milling wheat delivered last week to Liverpool traded at £200 per tonne, though the more general level for bread making wheat is in the region of £185 per tonne, which is more than double the price available 12 months ago.

There has been unprecedented pressure on futures markets all over the world with the London exchange seeing prices for what move up by £8 per tonne in one single day to a record high of £159 per tonne. The European futures also jumped by 10 (£6.80) to 236.50 per tonne for November. The largest market of all in Chicago soared by $20 (£10) to $266 per tonne for September. This latest rise in Chicago is being attributed to strong demand from Egypt and the Middle East.

The driver for this sudden surge in grain prices, most of which has occurred in the past month, is lower world supplies. The International Grains Council (IGC) has recently lowered its world wheat forecast for 2007-8 by seven million tonnes to 607 million tonnes. Global wheat demand, however, has also been revised downwards by three million tonnes to 614 million tonnes, which still means that demand will exceed supply.

The weather has been a major influence on the harvest, with the Canadian wheat crop forecast to be down by five million tonnes on the year to 20.3 million tonnes.

In Germany the latest prediction is that the wheat crop will be back from 22.4 million tonnes to 20.1 million tonnes. Reports from France also suggest that the harvest has been highly variable with maize yields down on the year.

However, there has been little change on the European futures market, with maize for November quoted at 230 per tonne. Large shipments of maize from Brazil are expected to fill the gap in the EU. However, world stocks of maize, at 96 million tonnes, will be at the lowest level since 1989.

World stocks of wheat have also been revised by the IGC to 111 million tonnes, which is the lowest since 1979. If next year's wheat harvest was to result in poor yields, then there is the prospect of a major crisis. Consumers now face the certainty of higher bread prices and increased costs for a wide range of foods.

Malting barley, the No 1 cereal crop in Scotland, has also risen sharply in price, with top quality samples quoted close to £160 per tonne, which is again twice the value ruling last September.

Feed barley is currently trading at just under £130 per tonne-ex-farm. That will impact severely on the livestock sector.

Oilseed **** crops in Scotland have performed at least as well as the five-year average and current delivered values are in the region of £215 per tonne for November.

The temptation for many farmers on the kinder uplands will be to plough up fields currently in grass and grow cereals as well as get rid of their cattle and sheep. Livestock production is only marginally profitable at current prices for both cattle and sheep and growing arable crops would appear the logical path to pursue. Something similar happened in the early 1970s, but a succession of difficult harvests saw the area under crops in less favoured areas fall sharply as farmers reverted to livestock.

However, most analysts predict that high cereal prices are here to stay, especially with an increasing quantity of maize being diverted to ethanol production in both North and South America.

This article: http://business.scotsman.com/agriculture.cfm?id=1375652007

Last updated: 30-Aug-07 01:20 BST

Comments Add your comment1. Organic peasant, N E Scotland / 8:25am 30 Aug 2007 I am one of those tempted to quit livestock production, our lamb and beef prices are well down on last year, grain at these prices is a much easier option and might just leave a profit. Unfortunately the good weather seems to have missed the N E but the sun shines in Edinburgh so the harvest must be good? Perhaps a visit to the large grain areas of Moray and Aberdeenshire is in order then we might get a more accurate article.

Report as unsuitable 2. Farmernot, on ma combine / 10:25am 30 Aug 2007 Dan's information on malting barley pricing is around £20-£25 out. Merchants indications to me are that top quality samoles will easily fetch £180-£185 with the possibility of the price rising even further.
I am also offered around £160 for November wheat ex farm so if feed wheat is there malting barley must be at least £25 higher.
Come on Dan get the pricing right......its not rocket science man !!!!
Also there are contracts on offer for next year at Min £160 ex farm for malting barley so there is demand and it outstrips supply.
Now then how many hectares will I put in ????

[grassfarmer]

Must be getting rich over there eh?
A good 360 acre arable farm for sale at the moment in SE Scotland has an asking price of over $2.75 million Cdn.
I really don't see how this helps the anti-cwb campaign.

[silverback]

We know that all you would like would be a continuation of low feed grain prices grass. If you had any grain to sell I guess you would be ok taking a buck or two less a bushel than everyone else hey? I guess you are then fine with the americans getting more for their cattle than you are? You don't even want to get the same amount? Isn't that the NFU mantra?

How does the NFU explain how great it is that the rest of the world is getting record prices for their grain, but not us in the prairies? I guess you are ok with that hey? Keep everyone at a breakeven level or lower so nobody can pay off their bills.

Good work.

[BennyHin]

Can you imagine what rail freight, fertilzer prices, herbicides,land rent, etc would be?

It wouldnt take a genius farmer to capitalize on these markets, even my urban freinds could buy farmland in Sk and make a killing.

[Fransisco]

Yup, it's a terrible thing when your land prices rise. Especially when it's because what you grow on it is increasing in value.

All of a sudden it's easier to borrow money against what you have and you have a retirement nest egg.

I've got a couple of buddies in New Zealand that had to go through that kind of hell. They bought land at under $1000.00 bucks an acre and wound up selling it in the $7000.00 range.

The buyers were happy to pay the price, because they can still easily make the payments and know their investment is solid because it's based on the productivity of the land.

But I guess that's just not the buy low, sell lower CWB, NFU philosophy.

[grassfarmer]

Silverback, you rather miss my point, as did the original poster in his understanding of the Scottish information he posted. He chose not to highlight the first comment after Dan's story which mentioned that the heartland of the Scottish malting barley industry has as yet not harvested anything and has suffered a very wet summer that makes any kind of harvest uncertain.

I have no vested interest in grain prices remaining low, as a miniscule user of pelleted feed it really doesn't make a big difference to my operation either way. And no, I'm not happy with getting less for my cattle than the Americans - but I don't blame the cwb for it.

My point in posting was to point out how ridiculous an argument picking occasional high prices for commodities around the world and blaming the cwb for them not being that high here is. Do you really think if it wasn't for the cwb you could export malt barley to Scotland and get $8 a bu in your pocket silver? Do you think the centuries old Scottish whiskey industry would suddenly switch to foreign barley because it was offered cheaper? Luckily they have a longer term vision in the old country where they realise if these malt growers were to grow different crops and forget the skills they have learnt over generations they would be in a poor position as maltsters. This is perhaps the longer term vision that western grain growers should adopt re the cwb. Sure it's not perfect but without it you will be worse off.
Look at the "marketing choice" we have in the beef processing industry - two companies running a price fixing cartel. I'd be all for an open market but the truth is with the current strength of corporations in N. America and weak anti-competition laws there is no free market.

[chaffmeister]

I have seen real buying interest – repeat – real buying interest this year from the EU for Canadian malt barley. I doesn’t matter how long term a vision you have relative to your local production of malt barley, when Mother Nature doesn’t cooperate, brewers still need their malt and you do what you need to get it.

Grassfarmer, you have indicated quite clearly why there will always be a malt premium over feed. Maltsters anywhere in the world know that they need to offer something more than feed to gets guys to grow malt barley. It’s that long term vision you speak of. So if we ever get to debate the idea of the malt premium disappearing in Canada if the CWB goes away, we need to remember your thoughts on Scottish maltsters and their long term vision to keep local growers interested in growing malt.

I sincerely believe that the western grain growers that are pushing for an open market have the long term vision. They recognize that the CWB is far from perfect and that, contrary to your thoughts, they see that without it they will be better off.


What is so bloody sacred about the CWB that some people won’t even consider its shortcomings?

[AdamSmith]

Chaffmeister wrote "What is so bloody sacred about the CWB that some people won’t even consider its shortcomings?"

That is the million or billion dollar question in this case isn't it.

We know it isn't based on preformance, the evidence all shows the farmgate returns offered by the cwb system are dismal and will never reach the returns offered by the open market,

so then what is it?

I believe it's based on FEAR. Fear of the unknown aka this little gem from Agstar;

"AS, you are good st reading today's prices, but can you tell me the average price for the next year?"

Absolutly no one can predict with any certainty what the exact price for grain will be 12 months out, you MAY be able to predict a certain range but the exact price no way. But that doesn't stop Agstar from making a gargantuan leap of logic to claim that you are unworthy of even trying to look after your own marketing decisions because you can't walk on water or become invisable.

Agstar's fear is that he knows he can't predict the future but he believes others can, or at least they can manipulate the markets in order to make the market go where they want it to go. So he believes in the cwb because he believes in the power to manipulate markets.

What Agstar has never even considered to ask himself is "What if the Cargills and the Drefuses can't predict any better than the next guy, and what if their power to manipulate is very limited within the context of world wide weather events and worldwide political and social changes"?

The CWB system in that context would lose a lot of it's glamour and it's appeal.

There are other less desirable aspects of fear at play as well, the fear that someone might sell grain for more than me, the fear of making bad marketing decisions, the fear of having to put an effort forward and on and on like that.

So IMO FEAR is what makes the CWB sacred to some people.

[grassfarmer]

fransisco, your logic defies me...you don't have to go to NZ to see appreciating land values, what about Alberta? Yet it is still in the designated area is it not? The grain farmers of Alberta must be doing really well under the CWB to have their land increase in value like that?

[mcfarms]

Actually grass farmer you missed the point of the intial posting, my purpose in posting this was to highlight a price for a commodity in another part of the world infpormation for things like malting barley and peas for example are sometimes a little hard to find and when one finds an article like this it's nice to share it. It gives an indication of where values backed off to your location should all things being equal reflect. Doesn't matter CWB controlled or open market it's vital for producer to know what the market is doing elsewhere in the world always has been now at least we can find things like this out, 20 even more 70 years ago the producer had no clue as to what was occuring in Scotland and to what extent the crop condtions there may have had on his bottom line in western Canada.
Yes I know that rhetoric usual rules the day here in agriville but once in a while a little market intelligence might lead to a little intelligent marketing.

[mcfarms]

Sorry for the typo's dang site needs spell check or I need to slow down when I type, As far as the comment about Scottish maltsters not switching to Canadian malt, like a maltster in 2002 in Canada they may have no other choice.

[btjadenlepp]

further to AS's argument... i think it's a combination of fear, lack of confidence and misplaced trust.

there are many professionals in the industry who can put together price forecasts, decipher trends and develop strategies better than the average individual farmer, who let's face it often has strengths and priorities in other areas of their business that are more important and useful for them to spend time managing. what the cargills and the dreyfus' of the world have is research and training, and skilled people with bonuses on the line who are responsible for analysis and decision-making in the markets their employers deal in every day. there are lots of well-trained market analysts around, heck i might even know a few that work at the board. every big grain company has a few, and none of the small ones are without their intelligence either.

there are even some marketing professionals, ahem, available for hire to individual farms to help them with marketing all of their crops. and they might even do good work for a transparent, reasonable fee. and if you decide one day you dont' need or want their help anymore it's even possible to part ways on good terms.

but i digress. some say malt should be worth $5-6/bu spot to us today, which is clearly the case based on these EU values, but i for one have not yet figured out a way to get that number printed on a cash ticket in western canada.

[agstar77]

BLepp you wouldn't have any interest in supplying this expertise for a price would you? But of course you understand that with there computers and the internet access to prices and buyers all over the world the real farmers on this site don't need help.

[btjadenlepp]

agstar for you, i make special price.

[northfarmer]

right on the money, BLepp......Agstar, from this real farmer to you...you get together with your collective.....free me to hire my own professionals and make my own decisions, have been on non CWB crops for many years and have done well......