March Agricultural Markets Preview

A little more demand

In the coming month, business on the German agricultural markets will be largely normal. Compared to February, when sales were partially slowed down by carnival and Mardi Gras, demand will often increase, also in view of Easter in April. At the meat markets, the higher-quality cuts are becoming the focus of interest. Fixed prices can be expected for young bulls, calves for slaughter and lambs, and the proceeds for slaughter cows and pigs should at least remain stable. Poultry meat sales are steady, eggs are firmly valued as demand gradually picks up. Sales of dairy products are increasing slightly, but prices are changing little. The small range of old-crop ware potatoes is supplemented by extensive supplies of early potatoes; the prices for the different origins and qualities develop differently. As the season progresses, the range of fruit and vegetables gradually becomes more varied.

Predominantly fixed slaughter cattle prices

The supply of young bulls is expected to increase in March, but will probably remain smaller than in previous years. Sales should run smoothly, especially since the slaughterhouses are already stocking up on more precious cuts for the Easter holidays. The producer prices for young bulls are therefore rising somewhat, but after the sometimes sharp increases in February, further increases should be limited. This means that the prices in the R3 class are almost 20 cents per kilogram lower than a year ago.

On the slaughter cow market, seasonal price increases are to be expected. At an estimated EUR 1,60 per kilogram slaughter weight, cows in class O3 will also fetch around 20 cents less than in March 2003. The supply of cows for slaughter could increase again in the last month of the milk quota year, since many farms are threatened with super levies due to excessive milk deliveries .

Prices for veal for slaughter will recover somewhat as demand for veal increases. However, the price range is limited by the extensive range. — The lamb business is also boosted in the weeks leading up to Easter. Although the increasing demand is offset by a larger supply of slaughter lambs, the prices for slaughter lambs are likely to reach their seasonal high in March.

Stable to fixed prices can be expected on the slaughter pig market. Because the EU Commission has introduced or increased export refunds for halves and cuts of pork. In addition, no significant quantities of pork are coming back to the market from private storage. Since the supply of pigs for slaughter from current production is slightly larger than in the previous year, significant price increases are not to be expected. A level of EUR 1,30 per kilogram slaughter weight is predicted for E-pigs.

Enough poultry, eggs just enough

Chicken and turkey are readily available to cover demand, but there could also be overhangs in some areas. The effects of the bird flu in Asia on the European market are still not foreseeable. If demand is expected to remain steady, it cannot be ruled out that poultry prices will temporarily come under pressure. However, they remain higher than twelve months ago. — By and large, the supply of eggs should be sufficient for demand, and there are no signs of any serious bottlenecks. Consumer demand is gradually increasing as Easter approaches, along with purchases by commercial dyers and the product industry are increasing. Despite a firm trend, prices are likely to match the previous year's line, as there were very strong increases in March 2003 due to the avian influenza in Holland.

Less milk yield

In the last month of the 2003/04 quota year, falling milk deliveries are to be expected, falling below the previous year's level. Because of the lower milk yield, the production of butter and skimmed milk powder will decrease somewhat. The demand for fresh milk products is seasonally revived, and towards the end of the month butter and cheese are also being ordered more for the upcoming Easter celebrations. The demand for milk powder for export may be growing. The prices for milk powder and also for cheese are expected to change only slightly. Butter prices continue to be based on intervention sales if sales into intervention continue.

New potatoes are gaining in importance

Stocks of ware potatoes and potatoes for processing from the German autumn harvest of 2003 are consistently smaller than a year ago, especially as many lots had to be sold early due to a lack of storability. The supply of good quality goods is only small in March. On the other hand, new potatoes from the Mediterranean region are coming onto the market to an increasing extent. Egyptian goods in particular are in high season. Because of the problems with stock goods, demand is likely to switch to new potatoes in some cases. Potatoes of poor quality are expected to be valued relatively low in March, while the demands for flawless batches are likely to rise somewhat further and exceed the previous year's level by around four euros per quintal. New potatoes could also become more expensive if the interest of the food retail trade increases rapidly and sales are dosed at the same time.

Goods in stock are still in the foreground

The apple stocks in Germany are still significantly larger than in the previous year, when there was little supply. The providers strive for continuous sales, so price increases are likely to remain the exception. The domestic supply of apples is supplemented by stored goods from other EU countries and extensive imports of new apples from the southern hemisphere. Pears from the German autumn harvest of 2003 are no longer available; the offer consists mainly of Italian stored pears and overseas goods. The range of fruit in March will be enriched by a noticeable increase in strawberry deliveries from Spain. There are also late varieties of oranges from Spain on the market.

Lettuce and mixed lettuce are likely to be available in sufficient quantities, while iceberg lettuce from Spain is more plentiful. The demands for white cabbage are probably still under pressure, because there are no signs of exports to relieve the large inventories. The stocks of red cabbage are significantly smaller than in previous years, but due to the very low demand, there are no signs of price stabilization yet. Sales of the plentiful stocks of carrots are steady and the prices are holding up. Stable prices are also expected for onions in view of falling stocks.

Source: Bonn [ZmP]