The drought and the heat wave that hit Spain in recent weeks have ended up distorting the forecasts of a cereal harvest that had generated good expectations. Our country will increase its deficit of raw materials in a global context marked by scarcity.
The entry of the combine harvesters is confirming the poor forecasts for the cereal harvest that already hinted at the lack of rain and, above all, the high temperatures that have been recorded since mid-May, a situation that is worsening day by day due to the heat wave that has settled in our country this past week.
The April rains had raised high expectations among farmers as they largely made up for the lack of rainfall in previous months. However, the good vegetative cycle that began to accompany wheat and barley was abruptly broken with the arrival of the first heat waves in May, which came at a key moment such as the ripening of the grain. A situation that especially affected barley and that has begun to become dramatic with the intense rise in temperatures that we are suffering these days, extending the problems to wheat.
The most recent estimates are those made this Thursday by Cooperativas agrialimentarias de España, which forecasts a harvest of 17.6 million tons, which is 29.6% less than last season and 28.5% less than the average of the last four years. A fall that is explained by the reduction in the yields of the two main crops, wheat and barley, of more than 1,000 kilos per hectare. By crops, soft wheat will reach 5.05 million tons (-28.7%); in barley, 6.6 million (-30%%); in corn 3.5 million (-15.9%); in durum wheat 674,402 tons (-9.3%); in oats, 839,526 tons; rye 227,629 and triticale and others 625,946 tons.
The drop in corn production, with a production of 3.5 million compared to the 4.2 million of the previous season, is mainly due to the reduction in the cultivated area.
The first forecasts of the Grain Sector of the Asaja agrarian organization pointed to a drastic fall, with a harvest without accounting for corn of 15.5 million tons, with a reduction of 21% compared to the previous year, that is, 4.1 million tons less.
What seems clear is the ghost of shortages
Similar were the calculations of the Spanish Grain Trade Association (Accoe), which placed its forecasts at 14.7 million tons -also without corn-, around 20% less compared to last year and -34, 52% compared to 2020, which had one of the highest historical records.
The general secretary of ACCOE, José Manuel Álvarez, acknowledges that the historical deficit that our country has, which consumes close to 38 million tons per year, will increase: “Although a reduction in consumption is expected, we will have to import more raw materials.”
What seems clear is the ghost of shortages, Álvarez told elEconomista.es. France, our main supplier of wheat and barley, has corrected a crop that presented problems due to drought, while there are no problems with regard to the other two major suppliers of our country, Romania and Bulgaria.
more expensive purchases
A different matter is that of corn. The war in Ukraine, our main supplier, has forced us to look for alternatives in new markets, mainly Argentina, Brazil and the United States. “Being further away, freight rates increase at the same time that the price of oil is rising, so we will have to pay more for what we buy,” says Álvarez.
The good news for farmers, which becomes a problem for ranchers, is that cereal prices will remain at the maximum that we have been experiencing in recent months. “Right now, the conditions are for prices to continue at high levels, because there is less world production and large exporters such as India, Russia or Ukraine are not in the market.”
Prices will remain at historical levels but will barely mitigate the high production costs
Barley was trading this week in the Spanish markets at around 365 euros per ton and in the case of wheat around 400, prices that have hardly changed since the bullish rally of recent months despite the fact that cereal is already entering this campaign, which always drives prices down. Market sources are considering that these price ranges at all-time highs will mark the negotiations, although they will hardly mean mitigating the high production costs borne by the rise in fertilizers, diesel or phytosanitary products.
Internationally, the situation is complicated. Ukraine’s difficulties in exporting have caused a wave of “food protectionism” and countries like India, another of the major wheat producers, have banned exports to prevent rises in the price of bread, the usual source of violent protests by the population. Added to these restrictions is the interruption of trade in fertilizers used for food production. Russia and Belarus export large amounts of potassium nitrogen fertilizers to many countries in Europe and Asia. The economic sanctions imposed on Russian products by the invasion of Ukraine are causing a disruption in the trade of these agricultural inputs.
The United Nations Organization has already sounded the alarm and has warned that the war in Ukraine could cause an increase of 13 million more in the number of people who currently suffer from hunger in the world.
Ukraine’s forecasts for this season call for a 40% drop in wheat production and a 50% drop in exports due to the Russian invasion.
Facebook Comments
Disqus