Grain harvest is plentiful, but prices are falling as storage costs bite
Wheat and rapeseed prices have dropped on European exchanges over the past two weeks as the new harvest arrives and Black Sea competitors expand supply. For Latvian grain farmers, this autumn's key challenge will be storage and sale timing rather than yield, amid rising borrowing costs.
Exchange prices for wheat have fallen from around 250 to 230 euros per tonne over the past two weeks, while rapeseed dropped from 550 to 520 euros. As recently as July, wheat on the Matif exchange had reached its highest level in a year and a half, but the arrival of the new harvest has now pushed prices downward.
Black Sea competition weighs on the market
Although Europe's overall harvest will be smaller this year — industry group Coceral estimated the combined EU and UK grain crop at 295.5 million tonnes in June, down from 311.3 million tonnes last year — this has not lifted prices, since supply from Russia and Ukraine is increasing. The US Department of Agriculture raised its forecast for Russian wheat exports next season to 47.5 million tonnes, while Ukraine's wheat harvest is estimated at 22-23 million tonnes. These volumes compete directly with Baltic exports in the same markets, namely North Africa and the Middle East.
Quality concerns and costlier credit
The European Commission's crop monitoring service classified western Latvia as an overly wet region in late July, where heavy rain is delaying harvesting and affecting grain quality. Industry estimates suggest that around 80% of Latvia's grain last year ended up classified only as feed quality, whose price is set by the cheapest global offer rather than the Paris exchange.
Rising financing costs add further pressure — the six-month Euribor rate has climbed from about 2.1% at the start of the year to 2.7% in August. For farms holding grain in hope of better prices, interest costs alone can amount to several euros per tonne. Industry observers say this autumn's decisive factor will not be the volume harvested but storage and sales strategy, an area where cooperatives with their own infrastructure and cheaper financing hold an advantage over individual farms.
