Spanish grain farmers eye good crop, tight supply

Spanish grain farmers expect to reap the benefits of producing their best harvest for three years this summer just as global supplies are tightening and driving prices higher. Asaja recalled in a statement that the International Grains Council forecasts for global supply of 1.803 billion tonnes in the 2011/12 market year would fall slightly short of 1.812 billion in consumption.
"This along with stocks at record lows both at European and world level serve to explain market tensions and underline good prospects for cereal farmers," the 200,000-strong union said. Benchmark US maize prices soared to a record high of $7.93 per bushel on Thursday after the government cut its estimate of maize stocks held by the world's top exporter of the grain.
Spanish farmers have benefited from good weather, unlike their counterparts in northern Europe who have had to cope with drought, and that has made up for their planting less to wheat and barley last winter than the year before due to low prices at the time.
On Friday co-operative farmers forecast a cereal crop of 20.3 million tonnes, while the Asaja union predicted 19.5 million, which compares with 18.7 million in 2010. By comparison, Secretary of State for Rural Affairs Josep Puxeu on Monday estimated a crop of more than 20-22 million tonnes, including rice, of which Spain grows about 1 million tonnes.
Although farmers expect a better harvest than last year's, they still predict Spain will have to import around 7 million tonnes of cereals in the 2011/12 market year. Spain has a structural grain deficit due to its poor soil and lack of arable land, making it a big import market which attracts attention from Kazakhstan to Argentina. Much of Spain's grain is consumed by the country's pig feed industry, the largest of its type in Europe.
DURUM EXPORTS The co-operatives, which produce some 5 million tonnes of cereals a year, nonetheless forecast Spain would have a surplus of some 500,000 tonnes of durum wheat, which is used to make semolina, couscous, bread and pasta.
"This surplus places us, if supplies are well organised, in an unbeatable position to export durum to the Mediterranean, which is in great need of it," Co-operatives Agrarias said in a statement. Brokers expect Spain's durum exports to be more like 200,000 tonnes but agree that demand is brisk.
Spanish farmers have begun to harvest durum wheat in the southern region of Andalusia and barley in south-central Castilla-La Mancha. Farmers and brokers say heavy rain earlier this week has affected the quality of the durum and barley crops but has not harmed the wheat crop, which is mainly grown in cooler northern regions and still ripening.