AgriFacts March | April 2022
Your monthly roundup of news, prices and other farming matters
Market Commentary Grain markets are experiencing significant volatility, with high prices being fuelled by declining global stocks and a series of unprecedented events over the past few seasons. Markets have contended with Brexit and the uncertainty that came with it; the resolution of which overlapped with the emergence of a global pandemic. Today, the escalating conflict between Russia and Ukraine is amounting to tragic events between two of the world’s leading grain exporters and, unsurprisingly, interrupting supply. With so many catalysts, to say that markets have been turbulent would be an understatement. Over recent weeks we have seen price swings that have never been experienced before. Wheat markets started this season at values of around £190/t in August 2021, at which point prices already felt relatively supported following a decline in global stocks from the previous season. From there, markets started to rise as it became apparent that both Canadian and US crops had been impacted by the dry growing season and suffered significant production downgrades, leaving the US with the smallest crop since 2002. European crops fared much better, but stocks had started at a low level due to the difficult season that came before. Russia, which had at one point expected to achieve a record crop, also saw production downgrades as a result of dry weather. This led to the implementation of export taxes and quotas in an effort to protect its domestic supply and keep a lid on flour prices. The result was a well-supported market, underpinned by diminishing global stocks. It is therefore to be expected that the Russia-Ukraine conflict would send grain markets into a chaotic run, with values gaining by 40% over a five-day trading period at one point. Wheat futures rose to their highest on record during the first half of March, with Paris futures exceeding €400/t and London futures rising above £300/t, breaking the previous record set in 2008.
Together, Ukraine and Russia account for around 9% of global wheat exports, 19% of global corn supplies and 80% of world sunflower oil exports. With Ukrainian ports effectively shut down and sanctions on Russia increasing, an anticipated 11 million tonnes of wheat supply must now be ruled out of the world balance sheet, ultimately forcing importing nations to look elsewhere. Unfortunately, there is no easy fix as grain stocks across the world are already well accounted for. India has a surplus and is anticipated to ship more wheat than it has historically, and EU supplies are in demand. In amongst all this, it is not just immediate solutions that are needed to meet export demand. With Ukrainian and Russian wheat and corn supplies unavailable, there are now increasing questions about 2022 harvest prospects. For Ukraine, it is not clear whether farmers will be able to drill spring crops or apply fertiliser and other inputs to winter crops. With production looking lower EU members are now asking if set-aside land can be brought back into production in order to boost EU supplies of wheat, corn, other grains and oilseeds. Waiving the set-aside rules could increase the cultivated area by 10-15% and there have also been calls for aid to help farmers with soaring fertiliser costs. At some point, high prices should start to ration demand and better harvests will arrive to replenish global stocks. However, in the short-term, high volatility can be expected to continue. Zoe Andrew Key Account Manager Grain Frontier Agriculture Ltd
Market Prices Month (ex farm) Midlands
Feed Wheat
Feed Barley
Oilseed Rape
Currency
November 2022
£254/t
£234/t
£632/t
£/€ = 1.20
Milk Data
Avg Monthly Price
UK Farmgate Milk Price
35.46 ppl
Fuel/Straw/Silage
Price
Fertiliser
Price
Red Diesel
N/A *
34% N AN (bags UK) £/tonne
£925.00
Big sq Baled Wheat Straw
£48.00/tonne
0:24:24 blend (bags) £/tonne
£675.00
Big Bale Hay
£66.00/tonne
20:10:10 blend (bags) £tonne
£825.00
p/kg dwt
Finished Steers
Finished Lambs
Finished Pigs
412.00
565.10
136.24
** The fuel market is too volatile to state a figure. Thecurrent current fuel market is too