US maize crop and world weather patterns to dictate 2003 grain prices

29 January, 2003

The size of the US grain maize crop and weather patterns in the grain producing areas of the world will have a large influence on EU grain prices in 2003 according to a leading UK economist.

Addressing the Teagasc National Tillage Conference, Dr. Gerald Mason of the Home Grown Cereals Authority (HGCA) suggested that “with low world wheat and feed grain stocks, the size of the 2003 crop will have a large bearing on grain prices”. This in turn will be dependent on the weather in the major grain producing areas of the US, Canada, Australia and the EU. The size of the US maize crop, the single biggest grain crop in the world covering 48 times the combined Irish wheat and barley area, will also be a critical determinant of feed grain prices.

“If poor weather reduces the expected world grain output of 597 million tonnes then grain prices could rise above their current levels. Irish farmers should see grain prices rise by up to €10 per tonne” said Dr. Mason. However, he cautioned that currency exchange rates and political issues can also have a large impact on world grain prices and these can be unpredictable.

With current prices for certain cereal grains relatively high, particularly quality wheat and malting barley, world output of these cereals in 2003 is expected to increase. However, to date world plantings of wheat are lower than expected which could indicate that output targets will not be met. This would also have a positive effect on grain prices, however overall plantings will depend on the weather during the spring planting season.

There is a more uncertain outlook for feed wheat and barley. The world market will be influenced by the US maize output but output of feed wheat and barley in the main producing regions will also have a major impact on price. Dr. Mason concludes that with the current low level of cereal stocks, increased price volatility in response to weather, is certain.

The full conference papers can be found in 2003 National Tillage Conference