AgriFacts July 2019 Your monthly roundup of news, prices and other farming matters
Grain Market Commentary Price volatility in the grain markets at this time of the year, has been commonplace for a number of years but this year’s uncertainties seem to have topped most. Regardless of your individual thoughts on global warming and climate change this year, rather like last, has certainly seen its share of ‘weather issues’ with the largest impact currently being felt in the US. Conversations are being had over the world with regard to the acres planted or not planted to corn but they are just conversations because in reality nobody currently knows the answer and further more we are in unchartered territory with regard to the impact that wet roots and delayed planting may have on the crop that is established. This problem isn’t new or exclusive to the US because in fact the accuracy of data globally has its issues and this in turn adds to the market’s volatility. Traders, farmers and governments are all consumers of agricultural data but knowing how the data is collected and being able to interpret it is vital because mistakes cost money. Here in the UK there is still much debate around the area planted to crops for this coming season – do you believe DEFRA or BPS for last year and what percentage increase or decrease in area planted do you believe in? Individual farmers know their land and what they have drilled but in reality, if the UK doesn’t know how many ha of wheat were in the ground last year why do we believe the US will know how much corn ha they finally have planted? Belief or lack of belief in data is a global market issue waiting to happen – too much data with potentially too many holes in it is in reality moving market values. If data is flawed, then the only way to really judge supply and demand is through price movements. This year the EU and the UK are likely to import less corn mainly due to price – its currently looking like an expensive luxury which is in big contrast to the last trading year where the UK may have imported close to 2.8M/mt. This price relationship between commodities is going to be important to watch this year, along with quality profiles, understanding trade agreements and logistics.
The World needs cereals for food, feed and industrial uses but the price is always generated through consumers ability to pay and substitution. If Global corn supply drops and wheat supply increases then corn consumers switch to wheat, but if wheat logistics fail then sorghum, barley and rice may fill the gap while remembering all the time that livestock numbers vary just as much as consumers taste. The jigsaw puzzle that is the global commodities market has a never-ending picture which is why it’s so important that individual UK farmers do the best job they can to protect their commodity during growing and after harvest. Attention to detail while cleaning stores and driers and segregating varieties and even individual fields, can create added financial opportunities and limit rejections / unforeseen costs. But so can keeping up with global price values – gone are the days were a farmer should be prepared to sell to the highest buyer on the day, they need to know what the value Contact of grain is by understanding domestic and international market Information and relating it to domestic supply and demand. This sort of knowledge will be vital if we ever get a chance to embrace true global markets but I suggest that before we do, someone in Westminster needs to work out how to correctly measure UK crops and how arable crops trade, or we may find we suffer from a major food security issue through bad data and lack of knowledge! Cecilia Pryce Compliance, Shipping and Research