Grains - Grains

Odds seem not in favor of higher prices for the upcoming crop

June 6, 2017 at 7:46 AM , Starry Night Ltd.
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Most probably supply and demand will meet at a lower than expected price point at the start of the harvesting season. The dry weather in the South regions will add to the discomfort; output will be lower this year.

The lower acreages this year and the dry weather from recent months in some regions of the South will negatively affect the overall output. However, farmers from the North expect a strong harvest.

Wheat: output of harvest 2017-18 is expected to be lower

SOFIA. Even if the average yield in the North regions were higher, especially in the so called Golden Dobruja -- the Granary of Bulgaria where usually every year the highest output of milling wheat is produced -- the expected fall in total output could not be compensated. Average yield of harvest 2016-17 was estimated at 4.7 mt/ha while output stood at 5,605,422 mt.

According to the Ministry of Agriculture, some weeks before the upcoming harvest, available plots for harvest stand at 1,100,591 ha, which is about 2.7% less than available acreages in 2016. Besides lower available acreages for harvest, the dry weather in South regions will affect the aggregate output on a national level. Fortunately, the great majority of output is harvested from the regions in the North and the Southeast region.

The nightmare: suppressed purchasing prices and lower output

Although during May 2017, the average purchasing price of milling wheat was around 0.149 EUR/kg EXW Bulgaria while that of feed wheat stood at approximately 0.143 EUR/kg EXW Bulgaria, at the beginning of harvest, farmers could face the nightmare of lower purchasing prices while some of them will realize and lower output. A substantial lower price could well be expected since buyers on green are placing offers at about 0.120 EUR/kg, according to local farmers.

The option of waiting for the storm to pass and sell later in the marketing season, for instance in September, might not be advantageous since prices could well be lower then. A case in point, according to the Ministry of Agriculture, the average purchasing price in July 2015 was 0.152 EUR/kg EXW Bulgaria while in September 2015, the same was estimated at 0.143 EUR/kg EXW Bulgaria. For the same period, during harvest 2016-17, average purchasing prices were somewhat stable.

Although lower than expected prices at beginning of harvests are anticipated, the likely drop could be too huge a blow for farmers. Soon the sky will clear for the result to appear!

Wheat, Bulgaria

Type

EUR/kg

milling wheat

0.152

feed wheat

0.145

EXW Bulgaria
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