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The cereal will be the great victim of the drought with the worst harvest in three decades

Date: February 28, 2024 Time: 18:34:46

Despite the rains of the last few weeks, all this water is late for the winter grain. The forecasts of the main organizations (Asaja, Cooperativas Agroalimentarias) and market operators such as the Spanish Grain and Oilseed Trade Association (ACCOE) agree: this year the harvest will be historically low. From ACCOE they estimate that Spain will produce only about 8 million tons this season (excluding corn whose harvest is estimated at 2.5 million tons). “It will be the worst production since 1990,” summarizes its general secretary José Manuel Álvarez for La Información. Added to the above are low prices for national grain for various reasons, one of them for organizations such as Asaja is the massive entry of Ukrainian grain ( Spain has imported a whopping 5.85 million tons since August 2022, according to the Ukrainian Grain Organization) and good production expectations in other European countries. Bad times for the cereal ‘made in Spain’.

Specifically, in the last year prices have gone down for cereal producers. The week of June 9 to 15 of this year, according to the data collected by the Asaja ‘Observatory of prices’, in the Lonja de Salamanca the ton of soft wheat was paid at 265 euros, while a year earlier it was around 383 euros. A similar situation occurs with oats, which last week was paid at 259 euros/tonne and a year earlier it was 362 euros. The same evolution fits in barley: 250 euros per tonne compared to 371 euros 12 months ago. Corn is not an exception either, if we take the drying corn listed in the Lonja de Toledo, the prices described a similar depression: Currently, 265 euros per ton are paid compared to 378 euros a year ago.

Agriculture estimates that Spain will need 35.85 million tons of cereal this season, of which 26.35 million are for animal feed

The irony is that Spain is a structurally deficit country and is a consummate importer of grain for its powerful livestock, especially beef and pork. Spanish needs are estimated at 35.85 million tons, according to the ‘Balance of Cereals in Spain. Campaign 2022/2023’ of the Ministry of Agriculture. The majority, 26.35 million, are destined to feed livestock. From the department of Luis Planas they calculate that more than 18 million tons of cereals will be imported.

The worst harvest in decades

The sectoral council of Cereals of Cooperativas Agroalimentarias de España was the first to raise the alarm: on May 30, it published its first estimate and the figure was around 9 million tons. This is 48.5% less than in 2021-2022. By crops: 5.05 million tons of soft wheat compared to bread wheat). Specifically, it estimates a yield per hectare of 1.66 tons.

For its part, Asaja calculates a harvest of just over 5 million tons (excluding corn) and a 65% drop compared to the previous year. Specifically, they point out, a decrease of 9.4 million tons compared to the previous season. If we analyze by crops: 2.12 million tons of soft wheat, 2.41 million tons of barley, 216,000 tons of durum wheat, 123,000 tons of oats, 31,000 tons of rye, and 103,000 tons of triticale. “It is the largest extensive crop subject to weather and never until 2023 had we reached this extreme,” says Álvarez (Accoe), who speaks of zero crops in areas such as Castilla-La Mancha, Catalonia and southern Aragon. .

“The rains have come very late,” says José Manuel Álvarez (Accoe)

“The rains have come very late” adds the ACCOE representative who points out that the damage may be less for the later varieties and that the recent rains may make it easier for crops such as corn to continue. “But in wheat, barley… the fish is already sold,” he says. In addition, he qualifies, excess water can also lead to the growth of “weeds” damaging crops. A context that he believes is detrimental to farmers and stockists, although feed manufacturers will have no problems. “It would be serious if they could use more ‘made in Spain’ cereal”, he concludes.

A similar opinion is held by Pedro Gallardo, president of Asaja Cádiz, who also believes that the latest rainfall falls “very late”, especially for the cereal in the center and south of the peninsula. Along these lines, he estimates that performance has fallen by up to 65% and calls the situation “very worrying.” Regarding prices, he estimates that only durum wheat has seen its price plummet “35%” in one year. “What makes the seller not find a buyer,” says the representative of Asaja. In Gallardo’s opinion, the solution involves providing producers with “tools to combat climate change, such as new genetic editing techniques.”

Waiting for better times

From MercoLleida, one of the leading agricultural markets in the sector, its general director Miquel Ángel Bergés, comments to this medium that cereal production has suffered “a drop of between 45 and 50%” and notes that this situation is assuming ” a disaster” for the farmer. In this sense, there is talk of “comparatively low prices” and “coverage available” for this entire month by livestock farms. That is, the demand has fallen. Specifically, Bergés maintains, given the severe drought in recent months, the farmers would have done their homework and stocked up on grain to feed a declining cattle herd. “Livestock censuses have been reduced and cows have been slaughtered due to the high cost of production, for example,” says this expert, who mentions the production cost overruns that have been suffocating the primary sector since last year.

“If they close the Black Sea Corridor there will be an automatic rebound in price rises,” warns the general director of MercaLleida Miquel Ángel Bergés

“The harvests are the worst in recent years, but there are no nerves in the market: the coverages are lengthening and the prices have dropped considerably (around 30% compared to the minimum prices of two summers ago, although still higher than those of two years ago).

“A start to the 2023-2024 campaign

Gallardo (Asaja) describes a similar scenario: “There are few operations. This is a very complicated year. Many farmers now have to pay for the inputs they purchased in the summer of 2022 and the income is shorter. It is being a simple start to the 2023-2024 campaign”. In this sense, he proposes the payment of direct aid or the implementation of bridging loans. For this producer “the life of the Spanish cereal producer is complicated” and he provides one more piece of information: compared to a yield that oscillates between 0.5 and one ton per hectare “in a normal year in Spain, countries like Ireland exhibit yields of 9 tons per hectare , for 8 tons from the United Kingdom and France”.

This Monday, in an explanatory video on the MercaLleida website, he described the situation as an “impasse” with “retired” buyers and with “prices that fluctuate up and down without a fundamental behind it.” A market with “ups and downs” subject to “weather fluctuations” in the case of such relevant international references as Chicago and Paris, as well as the fate of another major supplier: the umpteenth renewal of the Cereal Pact on July 18, from that Spain is the second largest beneficiary after China (5.85 million tons imported to date). “If they close the Black Sea Corridor there will be an automatic rebound in price rises,” concludes the head of MercaLleida.

* This website provides news content gathered from various internet sources. It is crucial to understand that we are not responsible for the accuracy, completeness, or reliability of the information presented Read More

Puck Henry
Puck Henry
Puck Henry is an editor for ePrimefeed covering all types of news.
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