Prices continue at higher levels

February 9th, 2012 - January was not the quiet month it usually is.

Concerns of dry conditions in South America resulting in potential downgrades of the corn and soya crop, caused futures markets to revert higher during the early part of the month.

Physical grain prices reacted in the same manner, with especially feed barley seeing good support.

Towards the end of the month a severe cold wave came over Europe, most notably in Russia and Ukraine, leading to worries of winterkill. Furthermore, strong rumors surfaced that Russia might impose an export duty on its grain exports, thus tightening supplies to the world market. Later this was officially denied, and in fact the volumes available for export were increased, but general market consensus is that this could be a mere delay.

Meanwhile, the supply situation on malting barley in the EU27 has further worsened with Denmark actively coming to the market to buy back positions, due to lack of sufficient quality material. Also the allocation of the temporarily zero import-duty quota of 300.000 tons for Non-EU barlies, proved to be a disappointment, with only 4% out of all bids rewarded. It is assumed that malting barley faced stiff competition from feed barley, and as a result much of the badly needed and anticipated Argentine malting barley will no longer come to alleviate the situation.

Argentina harvested an absolute record barley crop, with estimates ranging from 3,5 to 4,0 mln tons. It is most remarkable to see that this has not resulted in price pressure. Remaining non-committed volumes are estimated at no larger than 200-300.000 tons.

All togther prices for grains in general and malting barley in particular continued at high levels.

A good planting of the new EU27 malting barley crop, but above all good arrival of this crop, shall prove crucial now that there are little-to-no stocks to fall back on.

Weather elemenst will thus determine the markets in the months ahead until the arrival of the new EU27 malting barley crop by July-August.

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The above information is for general purposes only. Any reliance you place on the given information is therefore strictly at your own risk.

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