Minimising impact of high grain prices

The volatility of the worldwide grain market may continue to push meat prices upwards, according to AHDB analysts.

Speaking at the HGCA grain market outlook conference, senior analyst Jack Watts said the worldwide production of grain in 2011 was struggling to keep pace with growing demand. With an anticipated 25mt global deficit for maize pushing reliance on to wheat for animal feed, the volatility of the grain market may well hit meat prices, particularly as meat consumption rises.

However, Eblex sector director Nick Allen said that this may already have caused the worst of the impact on beef production for the next couple of years. He said: “If anything, it will have affected the beef and the meat that’s coming onto the market at the moment, because producers have had to endure some of the highest wheat prices that we’ve seen. Going forward a year or two, unless there’s a major weather incident, the wheat prices could well be relatively stable, so maybe we’re past the worst in terms of higher feed prices.”

Andrew Knowles, Bpex’s head of supply chain development said that any volatility caused by high grain prices and commodity speculation could be damped down by pigmeat producers, processors and retailers using risk management tools to guarantee prices, which would produce more stability across the supply chain. However, he told the MTJ that many in the supply chain viewed this as the responsibility of the producers, rather than seeing it as a solution that could be shared across the entire supply chain.
He said: “It’s in everyone’s interests to invest in risk management. If everyone was contracted together, it would make a better supply chain.”

“Long-term, it’s about all parts of the supply chain understanding the problems and investing against the peaks and troughs of volatility.”

“The supply chain is not best-served by retailers taking the opportunity to squeeze margins and then have to defend those positions when things get difficult. It wastes time, energy and resources and creates tensions, so that people chop and change.”  

>Conference warns on beef profitability

>Rising wheat prices lead to industry fears on feed costs


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