Since June 2020 all three cereals have shown remarkable and sustained prices rises, with maize up 69%, wheat up 64% and barley up 68%. These price changes can be attributed, broadly speaking, to an increased and sustained demand from China for maize in order to meet the needs of their fast grow pig herd which is being repopulated after being decimated by African Swine Flu during 2018-2019. Furthermore, dryness, much of it extreme, in North and South America have led to a lack of supply just at a time of an unusual and unexpected spike in demand. This is especially true to malting barley where North American output was decimated by drought across the northern prairies of America and Canada. This global misalignment of cereal supply and demand is being further compounded by shipping and logistical challenges, as bulk carriers, usually restricted to carry bulk commodities such as grains, cereals and ores are being repurposed to carry containers from China to America, due to extreme rise in online shopping and global trade in the aftermath of Covid 19.
As we look forward into the future, it is reasonable to assume that these new price levels will be maintained through harvest 2022, and that it will be harvest 2023, at the earliest, before we begin to return to “normal” price levels. However, much of that depends on both harvest ’22 and harvest ’23 being “normal,” with no significant weather events across any of the worlds major grain growing regions. As the rate of climate change continues to accelerate and rainfall patterns deviate from what is typical, achieving 2 consecutive “normal” growing seasons is not a foregone conclusion.
The upshot of this is that while harvest ’21 did deliver strong returns to Irish farmers, the on-going and sustained rise in other commodities, especially fertiliser (up 350%), means that up coming harvests (’22 & 23) will not be as rewarding, and that benign growing conditions will be needed to achieve the required margins for both farmers and maltsters.