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HomeLatest NewsThe fall in prices and the drought sow concern among cereal producers

The fall in prices and the drought sow concern among cereal producers

Date: March 28, 2024 Time: 22:23:09

The Spanish countryside looks to the sky more than ever and, especially, the cereal producers. International prices have fallen slightly in recent weeks while, in parallel, production costs remain high for farmers. To all of the above, let us add the threatening shadow of a new drought that would impact national production, reducing it for the second consecutive year. All this, in a country highly dependent on grain. Specifically, from Agri-Food Cooperatives, they estimate that Spain closed 2022 with a production of just 18.15 million tons. This is 25.8% less than the previous year. The Ministry of Agriculture calculates the cereal needs for the 2021/2022 campaign were about 37.7 million tons, compared to a local production of about 24 million tons including corn.

“The national market is paralyzed and expectant,” summarizes the general director of the Spanish Confederation of Manufacturers of Compound Animal Feed (Cesfac), Jorge de Saja, who recalls that a year ago the prices of cereals such as wheat and corn were at historic highs in international markets. Now, he adds, “they will be 20% cheaper.” Sources from Asaja and Agrifood Cooperatives agree that the market is “flooded” with grain thanks to the Black Sea corridor, which allows the export of Ukrainian grain. Specifically, according to data from the Ukrainian Cereal Producers Association (UGA), Spain is the second most benefited country after China and has already imported more than 4.72 million tons. The Polish government will continue last week that, from June, tariffs and limitations on grain imports from Ukraine will be introduced.

“Nobody thinks that it will go up in the short term”

For Saja (Cesfac) behind a retracted national market there is “a bearish expectation”, that is, it is assumed that prices will continue to fall, and the industry dedicated to the manufacture of feed does not find itself with a more expensive credit compared to improving costs. “Nobody thinks that the price will go up in the short term,” he confirms. According to the Price Observatory that Asaja prepares weekly, in its most recent version corresponding to the week of April, it registers few operations and even with a downward value in the markets of Salamanca, Córdoba, Seville, León, Extremadura and Toledo.

At the international level, according to the FAO, world cereal trade for the 2022 and 2023 campaign will reach 469 million tons. This is 2.7% less than in the previous campaign. Regarding production forecasts, the UN body estimates an increase in them to 786 million tons. This is the second largest recorded production. Regarding the European Union, he calculates greater production due to “an expansion of the plantations and good conditions at the beginning of spring.” However, he mentions the “dryness” of some areas of Spain, Italy and Portugal.

At the moment, international prices continue to fall: the FAO index rose 5.6% in March compared to February and 18.65% compared to the same month of the previous year. To this we must add that production costs continue to rise, although less. Specifically, fertilizers became more expensive by 25.69% in December compared to the same month of the previous year due to 23.89% of animal feed, 14.56% of phytopathological products and 47.13% of fuels , among others.

“Spain is a country that is highly dependent on grain” constant from Cooperatives. Together with Asaja, they warn that the next 15 days will be “fundamental” and that, fortunately, the entry of cold weather will delay the vegetative cycle of the cereal, making the farmer gain time for future rains. Specifically, I think that if it rains in April and May, it is possible that it “fixes itself” although the record productions of 2020 and 2021 would be far away.

A key raw material for meat and pork

But why is cereal so important for Spain? As the general director of Cesfac recalls, the country has a strong feed manufacturing industry to feed the livestock used by meat producers and the pigs that are fattened. Only in white-coated pork, the employers’ association of the Interporc sector estimates the existence of 86,000 farms and the generation of some 161,300 direct jobs that do not need Spain in the fourth largest producer in the world and the second in the European Union tons per year).

Sources from Agro-Food Cooperatives highlight that Spanish companies are capable of importing from other countries and continue to be competitive compared to other producers less dependent on grain. In this sense, both agrarian organizations point out that some market players are “withholding cereal for better times”.

* 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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