The wheat will not be delivered physically as the company’s strategy was to cover the price risk. Futures contracts with delivery in this interval were trading at EUR198-EUR199 per ton on that market on Thursday.
“All farmers will make money this season,” says Stephen Karl, managing director of the local operations of Almos.
Prices and production are good, and he does not know what will happen with the drought this summer, but everything looks very good at the moment, he added.
The new harvest sale season will begin in less than two months and the latest estimates for wheat point to a 7.4 million ton harvest, the same as last year.
This is one of the all time highs of the last decade and is in line with the trend of the European production set to reach 145 million tons this year, the highest in six years, according to Eurostat.
Russia and Ukraine of the Black Sea region will have a 72 million ton cumulated production, down 3% on the previous season.
The price of the new harvest is EUR30/ton higher on the bourse this season, Stephen Karl says, adding he estimates it will be EUR20/ton higher in Romania than last season. The increase on the bourse will not fully transfer in prices because of the abundant local harvest.
The wheat price will go down during the summer because some of the farmers will have no other solution but to sell because they have debt to repay and no space to store the harvest.
Romania will remain the third largest wheat exporter in the EU in the 2014/2015 season, with deliveries of 4 million tons, far behind France and Germany. Exports should go down 17% compared with the previous season and 80% of the wheat sold abroad will go to destinations outside the European Union where most countries in need of wheat are.
(English version by Loredana Fratila-Cristescu)