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Market outlook - Cereals

Good harvests create downward pressure on prices

Good harvests, several years on a row and poor development of demand lead to increasing cereal stocks and create downward pressure on prices, both at world and regional (EU, NL) level.

In recent years there has been abundant grain harvests. The growth in demand was moderate, with the result that increases in the stocks are expected for 2016. Cereal prices are expected to decline in 2016 relative to the previous year 2015. This is unfavourable for the arable sector of agriculture. However, it will contribute to keeping feed costs low this year. This is beneficial for the cost development in the animal sectors. The share of grain in the Dutch crop rotation and acreage is expected remain stable. Plays that cereals in the Netherlands, especially a rotation crop. The demand for grain for animal feed is the category that is still growing relatively strongly, while other uses (human consumption, bioenergy) show limited growth. The amount of grain traded around the world is growing by about 1% per year.

The grain price seems to develop in the coming years around a level of around 17.80 euros/100 kg. That is better than the average of the past 10 years (plus 8%). Grain production will therefore not change much and evolve fairly stable. The arable farmers will earn their income as usually especially with other crops such as potatoes and sugar beets. However, this also puts a floor under some canning crops.

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