German farmers should not sell new crop rye at current low prices but hold onto stocks and wait for an improvement in the market, the association of German rye producers said on Friday.
Germany is set for an excellent grain harvest this year as late sunshine helped work and raised crop quality.
But this summer's rye harvest will have to be sold commercially for the first time in recent history as the European Union has ended intervention subsidies. In past years market prices have not usually fallen below the intervention price, at which the EU guaranteed to buy crops from farmers.
About half of Germany's rye crop was traditionally sold into EU intervention. Expectations of a good crop and the ending of the intervention safety net mean rye prices have collapsed, the rye association said.
Farmers are only receiving 65 to 85 euros a tonne against 113 euros a tonne for old crop rye paid in March. The association said farmers should not sell at such low prices immediately after the harvest. It expected rye to achieve large sales to animal feed makers and expected its price to rise more closely to intervention grains in coming months.
"Feed wheat can be directly replaced by rye," it said. "At a price difference of five to 7.5 euros to wheat rye is profitable for on-farm and industrial feed compounding." It expected rye to replace barley in compound feed with barley going into intervention.
At a low price rye could also replace corngluten in feed for milk cows, it said.
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