AgriFacts June 2022
Your monthly roundup of news, prices and other farming matters
Market Commentary - Have we seen the market highs? There remains a lot of uncertainty in the global wheat market, that is for sure. Global futures markets, including ICE London wheat, has witnessed significant volatility in the last month with some wild intra-day trading ranges. New crop ICE London futures are now 20% lower from their Mid-May high of £360/t on the Nov22 contract as the UK market has tracked the sharp declines in Chicago and Matif wheat, with the expectation of a large UK wheat crop coming and the requirement to be export competitive as a result.
only 64% of the country’s soft wheat crop being reported in good or very good condition as of most recent reports, compared to 89% at the start of May22, and falling below last year’s level of 80% at this stage of the year.
The wider markets again continue to be dominated by geo-politics, seasonality and weather, with the macro-outlook suggesting a Global recession and the potential for a subsequent slowdown in food demand in the medium/long-term weighing heavily on forward thoughts. The Russian wheat crop estimates appear to be getting bigger by the day, Ukraine exports of wheat and corn are being talked up as high as 40mln mt and the Kremlin has even suggested that they will allow UK warships to clear mines along the Black Sea coast in order to re-open shipping lanes for food and fertiliser - if this happens the Global balance sheet will not look as tight as it did a month ago and this would mean that these high prices may not be justified but the question remains as to whether that has now been priced in.
The persistent dry weather across the EU had seen wheat yields and production estimates lowered, but with harvest now underway on the continent the actual impact seems to have been much less significant. The recent rainfall seems to have been enough to finish off the crops and the outlook is now looking increasingly stable across the EU and Northern Europe. While still being influenced by the wider global markets, UK prices may have to take on a more localised supply/demand, especially if the new crop outlook continues to support a larger crop. The UK needs to be export competitive, and that will be of greater benefit/wider opportunity if we produce a higher quality wheat crop. Jonathan Lane Head of Grain Trading | ADM Agriculture Ltd
Like other parts of Europe, the relatively dry spring raised some concerns over the impact upon the potential of crops, especially in the regions where precipitation has been lower than average in the UK. Crop ratings in France have tumbled with
Market Prices Month (ex farm) Midlands
Feed Wheat
Feed Barley
Oilseed Rape
Currency
November 2022
£273/t
£243/t
£579/t
£/€ = 1.17
Milk Data
Avg Monthly Price
UK Farmgate Milk Price
37.44 ppl
Fuel/Straw/Silage
Price
Fertiliser
Price
Red Diesel
N/A *
34% N AN (bags UK) £/tonne
£740.00
Big sq Baled Wheat Straw
£49.00/tonne
0:24:24 blend (bags) £/tonne
£807.00
Big Bale Hay
£70.00/tonne
20:10:10 blend (bags) £tonne
£722.00
p/kg dwt
Finished Steers
Finished Lambs
Finished Pigs
412.00
565.10
136.24
* The current fuel market is too volatile to state a figure.
* The current fuel market is too
AMC - Providing Certainty in such Uncertain Times With uncertainties of a Post Brexit and Post Covid economy now compounded by concerns over the effect of the Russian invasion of Ukraine, many may be seeking ways to make their farming businesses more robust, to face whatever the future may bring.
On a similar rate of interest, the difference between a 20-year term and a 30 year term can be as much as £1,000 per month for every £750,000 borrowed. This, combined with the ability to make additional capital repayments (to a variable rate loan), offers maximum flexibility.
Often referred to as “price takers rather than price makers”, farm businesses may have less control over prices received for their commodities and so it would seem logical to focus on the business costs, that can be directly influenced such as finance costs.
Long term interest only loans of up to 30 years Borrowing on a long-term interest-only basis, while existing commitments are being repaid, can make the time-specific opportunity to buy neighbouring land much more comfortably affordable and can leave the next generation with a more viable business.
During such uncertain times, the long-standing selling of an AMC facility is perhaps more valuable than ever and it is therefore worth a reminder of what AMC can offer, in terms of long-term stability -
Long Term Fixed Rates AMC are still able to offer long term fixed rates of anything up to 30 years.
A Commitment for the term of the loan
While fixed rates have recently increased, they still look attractive in comparison to historical interest rates and can offer the certainty of knowing what the monthly commitments will be, regardless of what happens in the wider economy.
While many lenders insist upon reviews throughout the loan term (often including a review of the initial decision to lend), AMC offer a commitment for the term of the loan.
If you are interested in discussing what AMC could offer your business, either to finance a new venture or by restructuring existing debt, speak to James Thompson on 07808 473962, who will direct you to your local AMC representative.
Repayment terms of up to 30 years While the future looks so uncertain, minimising the monthly financial commitments can offer more resilience to such volatility.
Sustainable Farming Incentive DEFRA has confirmed the Sustainable Farming Incentive (SFI) will open for applications from 30 June. This is the first part of the Environmental Land Management (ELM) programme to be put into practice. Initially, just three Standards; Arable and Horticultural Soils, Improved Grassland Soils, and Moorland will be available. Further standards will be added each year. Agreements will be for 3 years and
payments will be made quarterly in arrears. Initially no capital items will be available under SFI. Land in an existing environmental scheme may be eligible for SFI too, provided there is no double-funding of management options. For further details of SFI, contact us.
DEFRA Grant Funding The ‘Adding Value’ grant, the third element of the Farming Transformation Fund opened in June, with the deadline for Initial application of 21 July 2022. Grants of between £25,000 and £300,000 (covering up to 40% of the eligible costs of a project) are available for buildings, machinery and equipment that add value to eligible agricultural products after they have been harvested or reared.- For further details of the Adding Value grant, click here or contact us.
is expected in Autumn 2022 and is the final element of the Farming Transformation Fund. The grant is to help replace or expand existing slurry stores to provide 6 months storage, and will fund around 50% of the cost. The application will be a competitive two-stage process, with applications offering the best environmental outcomes likely to be prioritised. For further details about the Slurry Infrastructure grant please click here
DEFRA recently announced further details on the Slurry Infrastructure Grant which
Key Dates Date
Regulation
Restriction
30 June
RPA
Sustainable Farming Incentive Applications open
29 July
RPA
Deadline for submitting application for a 2022 Mid Tier Countryside Stewardship/ Wildlife offer agreement.
1 August
Cross Compliance
If you have been granted a derogation by RPA, you may be able to cut or trim hedges throughout August, to sow oilseed rape or temporary grassland.
Sugar Beet Prices British Sugar has announced a one-year fixed sugar beet price of £40 per tonne for the 2023/24 campaign, a 48% increase on the previous year. Growers with an existing multi-year contract will be offered a price rise to £32 per tonne, or an increase to £40 per tonne if they commit to a further year of contract.
The Green Offset Read our one year on review here
fishergerman.co.uk 01858 410200 farms@fishergerman.co.uk