Difficult situation of the Polish grain sector
Recent years have been difficult for the Polish grain sector, which resulted from the very high volatility and unpredictability of market conditions. Large grain exports were necessary and Poland coped, exporting record amounts of grain – emphasized the minister, who participated in the Polish Grain Day 2024 “Safe Poland” conference.
Siekierski pointed out that Poland is the third producer of cereals in the EU. Since pig production has been declining for several years, large grain exports from Poland are necessary to balance the domestic grain market.
Referring to this year's harvest, he said that “for now, the drought is a bit visible, but it should not limit the harvest volume and it should be at the level of last year.”
Cereal harvest forecasts in Poland for 2023
According to the Central Statistical Office, total cereal harvest in 2023 is estimated at 35.8 million tonnes, i.e. by approx. 0.5%. more than the previous year's harvest.
The head of the Ministry of Agriculture noted that there will probably be lower harvests in Russia and Ukraine, so the market situation will be different this year.
Cereal subsidies and their impact on the situation of farmers
The minister announced that 180 thousand farmers submitted applications for cereal subsidies (PLN 200-300/t). He added that it is not yet known how much and whether the rate will need to be reduced or not. The government allocated PLN 1.2 billion for subsidies.
Grzegorz Kozieja, director of the Agricultural and Food Sector Analysis Office of BNP Paribas, also spoke about the need to export grain from Poland, citing the bank's analyzes and stating that the management of the surplus of 10 million tons of grain would require a three-fold increase in pig production, which is impossible.
Discrepancies in the estimation of grain stocks
Mirosław Marciniak, an expert from the analytical company InfoGrain, referred to the estimation of grain stocks. As he said, differences in the approach to estimating grain stocks have been discussed for at least a year and there are large discrepancies in their assessment. “Today, no one knows what these stocks actually are,” he said. He added that without reliable data, it is difficult to talk about the country's food security.
According to Marciniak, wheat stocks at the end of the 2023/2024 marketing year amount to approximately 3 million tons. “I'm not entirely sure whether they are 0.5 million tonnes higher or lower, but they are certainly not stocks of 8.5 million tonnes that were recently mentioned,” he said.
“If stocks were as high as claimed, farmers should have benefited from the subsidy and sold grain in May, meanwhile companies had huge problems with purchasing grain and meeting their needs. The problems were so great that imports of, among others, wheat were needed feed from Germany,” he noted.
Global situation on the wheat market
Referring to the global situation, he added that the US Department of Agriculture (USDA) in its first May report on the world grain market showed that the supply of wheat still did not keep up with demand and there was a decline in global stocks of this grain. But the situation, among others, The weather has changed so much that these first forecasts are no longer valid, as many analysts estimate that wheat production in the world will decline. This includes, among others: Russia and Ukraine – added.
In Russia, the largest exporter of wheat, the weather in the growing areas is unfavorable, with heat and drought. Until recently, production in Russia was estimated at 88 million tons, currently it is estimated at 74-75 million tons. This means that there will be a much smaller export surplus, which may result in this country introducing export limits, which has already happened, and this would cause confusion on the stock exchanges – explained Marciniak.
He added that a decline in grain harvests is also forecast in Ukraine. It may be approximately 19 million tons compared to 23 million in the previous season. In total, this means that the export surplus of wheat from the Black Sea regions will decrease by 10 million tons compared to the previous season, but will still amount to over 50 million tons.
Correlation of grain prices with stock exchange quotations
Both Marciniak and Kozieja drew attention to the high correlation of the domestic grain price with quotations on the Matif stock exchange. Wheat prices to war in Ukraine were below EUR 220-230 per tonne, after the outbreak they increased significantly, reaching a peak in April 2022 – EUR 438/t. In February-March this year, there was a significant reduction in prices, even to below EUR 200/t. Currently, the price of wheat on the Matif exchange (5/06) is EUR 254/t.
According to Marciniak, a return to the level of EUR 300 per ton is possible, e.g. if they are further reduced due to the weather. harvest forecasts or they will be blocked again ports on the Black Sea. Whereas prices on the Polish grain market are “strongly dependent on political decisions”, “Subsidies, uncertainty and unpredictability make life very difficult for trading companies and farmers,” he pointed out. In his opinion, compensation for farmers could be much better spent on investments in port or railway infrastructure. (PAP)
author: Anna Wysoczańska
