Agrifacts April 2020

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AgriFacts April 2020 Your monthly roundup of news, prices and other farming matters

Grain Market & Covid-19 At the time of writing we are in the middle of the Coronavirus pandemic having just experienced the wettest winter since records began, coupled with the fact that Brexit has happened but nothing has been agreed! No amount of experience in the grain trade can equip a trader to predict what the outcome to grain prices for next season might be, and I am fully aware as soon as this article is read it will be out of date. What we do know is the UK will have to import grain to balance the books Currency is king! Over the last three months sterling has oscillated in value by +/- 12.50%. Which is the equivalent to nearly £20/ mt on wheat and nearly £40/mt on rapeseed. What the level of sterling will be in the future is pure conjecture but will have a most important role to play in the cost of imported cereals. It is too early in the season to estimate the global cereal production but there is an important question over demand; The world has changed following the pandemic – much will depend on how long isolation continues and what affect this has on eating habits; but I do think less grain will be used for fuel. Globally the main market for maize - and a lesser extent rapeseed - is Biofuel and with over a third of the world’s population on lock down understandably the oil price has collapsed this has resulted in brutal falls in the price of maize which is a direct competitor to feed wheat. Many UK compounders are happy to substitute wheat for maize provided it is cheaper. Milling wheat is a rather more complex picture; undoubtedly panic buying and hoarding coupled with difficulties in the supply chain caused by isolation has led to a surge in the price of wheat for spot delivery. This is not just nationally but internationally. The question is what will happen to demand in the weeks ahead when more is known and things settle down? We have already seen McDonalds, Burger King KFC etc close all their restaurants with the subsequent cancellation of flour orders and presumably chicken and beef; Supermarkets are insisting on queuing and rationing and all this does not bode well for demand especially if it is happening worldwide? Chicken is a vital market for feed wheat consumption and I would question what effect the closure of the fast food / restaurant trade will have on chicken consumption?

Rapeseed; most winter crops in this area have failed; despite this the price is shocking and much of the blame has been put down to imports. Many farmers locally have given up growing rapeseed and continue to look for alternatives. It is concerning how the price of a crop in deficit can be so dependent on the import price and this might reflect what could happen to wheat next season? Barley; finally a spell of settled dry weather will allow the wheels to turn and spring barley is estimated to increase in area yet again. Premiums for malting are dire as there is little demand for beer as the pubs are all closed. In view of this much will find its way on to the feed market. The price of feed barley is a big discount to feed wheat where it will undoubtedly be substituted but at current levels will struggle on the export market because of competition from maize. Oats; the UK millers have been reluctant to contract spring oats in the mis-guided belief that they have winter oats contracted. In this area anyway these winter oats never got planted; so these contracts wont be supplied and millers will have to turn to UK spring oats or imports if the quality fails once again. AS always quality will be paramount. Beans: the market for beans has been an inspiration! This year the price has defied gravity and it looks likely that prices for next year will continue to please most growers. Winter plantings mostly never happened and spring plantings will bring the overall area to about the same as last year. Feed beans already >£200 plus HC premium on top. Summary; I have been in the grain trade for over 30 years and rarely has the market been so confused – supply has been decimated by the atrocious winter weather; demand has been compromised by the pandemic; sterling is highly volatile and is of even greater importance now as we are out of the EU; As yet no agreement regarding trade with the EU and with global weather so uncertain is impossible to call this market. John Aprahamian Market Analyst


Market Prices Month (ex farm) Midlands

Feed Wheat

Feed Barley

Oilseed Rape

Currency

April 2020

£156.00/t

£129.31/t

£305.62/t

£/€ = 1.13

May 2020

£157.00/t

£129.85/t

£306.31/t

€/£ = 0.89

June 2020

£158.00/t

£130.46/t

£307.15/t

$/£ = 0.81

Milk Data

Avg Monthly Price

UK Farmgate Milk Price

28.77 ppl

Fuel/Straw/Silage

Price

Fertiliser

Price

Red Diesel

60.02p/litre

34% N AN (bags UK) £/tonne

£234.00

Big sq Baled Wheat Straw

£43.00/tonne

0:24:24 blend (bags) £/tonne

£263.00

Big Bale Hay

£54.00/tonne

20:10:10 blend (bags) £tonne

£243.00

Finished Steers

Finished Lambs

Finished Pigs

333.81

515.10

160.28

p/kg dwt

Countryside Stewardship Scheme - apply now The application window is now open for a Mid-Tier Countryside Stewardship scheme and closes on the 31 July 2020, although an application pack must have been requested by 31 May 2020. Mid-tier schemes are generally for a five-year term and part or all the farm may be included. The scheme offers payments for a wide range of annual management options providing environmental benefits, including arable buffer strips, managing grassland with very low inputs and wild-bird mixes. A number of the options can form a valuable addition to an arable rotation, with favourable returns when compared to arable break crops and benefits to soil organic matter and black-grass control. In addition to the annual management options, there is also funding available for capital works such as new fencing, gates or livestock feeders and troughs. Provided attention is given to establishing and maintaining any of the options, and basic records are kept, these schemes offer a reliable income stream that will become increasingly important to farm businesses as Basic Payment Scheme decreases over the next few years. If you would like to discuss a potential scheme please contact a member of the Agribusiness team.

Key Dates Date

Regulation

Restriction

1 March

Cross compliance

13 March

RPA

BPS application window opens.

31 March

RPA

Higher Tier CSS application pack deadline.

1 May

Cross compliance

15 May

RPA

BPS application deadline.

31 May

RPA

Deadline for making certain changes to a submitted BPS application.

31 May

RPA

Mid Tier CSS application pack deadline.

You must not cut or trim hedges or trees from this date, but you can carry out hedge and tree coppicing and hedge laying from 1st March until 30 April.

Ban begins on hedge or tree coppicing and hedge laying.

fishergerman.co.uk 01858 410200 farms@fishergerman.co.uk

Fisher German is a limited liability partnership, registered in England and Wales. Registered number: OC317554 Registered office: The Head Office, Ivanhoe Office Park, Ivanhoe Park Way, Ashby de la Zouch, Leicestershire LE65 2AB Regulated by RICS Fisher German LLP has tried to ensure accuracy and cannot accept liability for any errors, fact or opinion. Please do not use this as all the advice needed to make decisions.


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