Weather has an impact on the quality

The storms in Germany over the last few days delayed the harvesting process in many place. Some experts already fear an impact on the quality of the wheat harvest. Alfred Reisewitz, AGRAVIS expert for grain trading, takes a look at the current market situation.

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Mr Reisewitz, how do you assess the current situation with regard to the wheat harvest?
Alfred Reisewitz: The quality of the wheat harvested in Germany so far is largely good to very good. However, the protein content on average is around 1 percent lower than in 2013. In addition, the protein content varies widely in the individual regions. The bulk densities and falling numbers are high, no corn anomalies or mycotoxin issues have been discovered yet. However, around 50 percent of the wheat in the north and east of Germany, as well as in the southern and western low mountain rainges is still in the fields – regionally this figure is even as much as 70 percent. As a result, with an eye on the incosistent weather forecasts we have to assume a higher risk potential with regard to quality parameters. In particular, bulk densities and falling numbers may suffer under these conditions. In addition, the sprout risk increases for susceptible varieties.

What to the – possibly – poorer qualities mean for trade?
Alfred Reisewitz: First of all, as the harvest situation becomes more difficult, there is a logistical challenge for the registration trade, as the harvest qualities required by the market and the the greatly deviating qualities have to be separated. If there are falling number and bulk density problems to a larger extent, we will have to come to technically possible compromises with the grain-processing industry. We know from past experience that the milling and starch industry can adjust flexibly to new quality conditions to a certain degree. But there are limits to this as well. There are as good as no comprise in the export trade. The exporters here and the customers in the destinations insist on complying with the contractual values. This is also one reason why premiums have increased strongly in the last few days for good qualities at the export markets in Hamburg and Rostock.

How do you evaluate the current wheat prices? Has the low been reached?
Alfred Reisewitz: A look back at August 2013 shows that the low for prices for 2013/14 was reached exactly one year ago in the first half of August. At present the impression one gets is that this point was reached for the 2014/2015 campaign on Friday 01 August and Monday morning, 04 August. Fundamentally, nothing currently suggests there will be a boom in grain prices, but the arguments for structurally falling prices are becoming thinner. In addition, we got the impression in the last few days that the industry's readiness to buy at the current price level has increased significantly. In conclusion, I have to say that I can only answer this question clearly in a year's time.

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