The drought that we have experienced in recent months, and from which we have not yet recovered despite the rains, has brought instability and uncertainty to these markets. The prices of the different grains (wheat, barley and corn) are already below the levels prior to the invasion of Ukraine at the gates of the start of the harvest.
A price roller coaster. The prices of the main grains grown in Spain have suffered a period of instability in recent years. Despite the apparent return to levels prior to Russia’s invasion of Ukraine, wheat, barley and corn prices remain above pre-pandemic levels.
According to the latest indices, with the decreases registered in recent days, soft wheat is 8.66% cheaper than in January 2022, corn is 3.55%, and barley costs 10.02%. The case of durum wheat is more notorious, since its price escalation occurred in the third quarter of 2021, with which its price is now 28.97% below the level of January 2022.
The average prices for the last 2022-23 campaign, according to data from the Ministry of Agriculture, Fisheries and Food, now range between €312.41 per ton for barley and €453/ton for durum wheat. This contrasts with the maximums seen almost a year ago of €353/t and €531/t respectively.
The most uncertain harvest. But this drop could be a mirage since there are two factors that are expected to influence the future of prices, both related to the supply of grain. The first is the future of the conflict in Ukraine.
Spain is a net importer of grain, so international market prices affect the available grain supply. These prices, in turn, depend on how easy it is for these goods to leave a country in conflict for a year.
The agreements appear to be allowing the flow of these foods for now, but nothing can be taken for granted in this context. A context for which is the greatest concern of the agricultural sector these days: the drought.
End of the drought? Although the rains of the last few days (torrential in some places) seem to indicate otherwise, the drought has not yet ended. It should be noted that in many places the rains have arrived late to save the harvest.
In addition, making use of the water from the recent downpours is particularly difficult given the levels of dryness that the peninsula’s soils have reached in recent weeks. Thus, it will be necessary to wait to verify the evolution of the national production of these products.
Nothing can be taken for granted, but farmers find themselves in a situation with a difficult exit: the low prices marked by international markets will mean that the harvest, pyrrhic or null, will not bring them enough profits.
European barn. The uncertainty and supply problems caused by the war in Ukraine led some to think that Spain could assume the role of Europe’s breadbasket. A year later, any hope has been abandoned in the harsh weather conditions.
Livestock has experienced an annus horribilis and the prospects for improvement are not clear. We still don’t know if the last year has been an exception or a clue about the weather ahead. The fact that this year we may swing from three consecutive La Niña events (cold events) to El Niño (an event associated with higher temperatures) does not invite optimism.
Uncertainty and denial also make it difficult to adapt to a situation that could get worse. The drought we are experiencing is not only due to the lack of rainfall this year, but also to a lack of water accumulated over the last few years. It is not clear what will happen in the coming years, but the dream of becoming a breadbasket for Europe is far away for the Spanish countryside.
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Image | michael lechner
