Early barley yields are an uncertain guide to prices

THE first of this year's UK cereal harvest has already been taken, with combines cutting winter barley crops in the south-east of England some two weeks ahead of normal.

Yield reports from the area indicate that crops are back 15 to 20 per cent on the previous year.

But yields from these early crops are not significant in the bigger picture, where future prices have eased back in recent weeks with projected world yields being higher than previously expected and, in UK terms, rain finally reaching previously drought stricken areas.

Yesterday, November wheat futures closed at 160.75 per tonne, well below the peak level reached last month, although it was 3.75 per tonne ahead of Thursday's closing figures.

One possible reason for the slight rally was the release of European projected yields showing an expected 1 per cent reduction in cereal production within the EU, with an estimated 272 million tonne total yield.

Commenting on the latest projections, Ian Backhouse, chairman of the Copa-Cogeca cereals working party said: "Grain stocks are low and the market situation is expected to remain tight.

"Cereal stocks are predicted to remain under pressure and the market will stay volatile, driven by the Russian and Ukraine harvests."

Copa-Cogeca, which represent European farm co-operatives, urged EU politicians to bear this year's projections and predicted higher world demand for food in mind when setting future agricultural policy in Europe.