Agrifacts | January 2023
Your monthly roundup of news, prices and other farming matters
| Market Report
Wheat
Markets fall heavily at start of new year
Wheat futures rallied over the festive break with many regaining the losses they had posted earlier in December. The primary driver for this was the extreme cold that hit a significant part of the US winter wheat belt with freezing temperatures as far south as Texas raising concerns for winter kill. US winter wheat was already in poor shape with over 70% of the area drilled in drought conditions heading into the winter. However, world wheat markets have not enjoyed a happy new year so far in 2023 with most markets dropping below the levels that were trading prior to the start of the Russia-Ukraine conflict in February 2022.
The results of the latest United States Department of Agriculture (USDA) US winter wheat crop ratings were mixed but, overall, better than expected. Russia continues to dominate the export market for wheat following its record 102-million-tonne crop. Meanwhile, the export corridor in the Black Sea remains open for shipping from Ukraine. Australian wheat production estimates are now as high as 42 million tonnes, this would be a significant gain on the 36 million tonnes it produced last year, which is currently its highest production record. India may similarly be set to achieve a record crop of up to 112 million tonnes as its wheat planted area is up 1% on the year and favourable weather is predicted. The high production estimates for Australia and India saw speculative selling take US wheat futures to their lowest since October 2021.
Barley
Old crop malting barley market very quiet
As is usually the case this time of year, most maltsters have a very high cover of barley against sales of malt they can make (around 90%). Any further demand they have will be dependent on sales of beer and spirits running at projected levels or better. In the current economic climate, it may be some time before demand can be known. As a result, prices to growers have slipped and some merchants will need to part with stock in the coming months. In the port catchment areas of the south coast of England, premiums over feed have shrunk to £30/t and are likely to continue to fall.
Feed barley lacking buyers & UK barley exports slow
Demand from UK feed compounders for barley is very low. Barley’s discount to wheat has shrunk as wheat has come under pressure and is no longer such an attractive raw material in a livestock diet. The likelihood of seeing any upside in prices today is low and would be mainly reliant on problems arising with the Black Sea export corridor agreement or a drought in Brazil impacting the second grain maize crop that’s about to be planted. Without these factors we are heading towards new crop prices, as EU livestock numbers will not pick up until the summer at the earliest.
It is believed that only 650,000 tonnes of barley exports will have left the country by the end of December 2022. This leaves 950,000 tonnes to ship in the next six months, which is unlikely to be realised if weather patterns follow average trends. With feed barley no longer at an attractive discount to wheat and the EU drinks industry well covered, it may be difficult to generate fresh export demand.
Oilseed Rape
Ex-farm
values reach new lows for the crop year
After a promising rally pre-Christmas, rapeseed suffered from a new year hangover with ex-farm values touching lows for the crop year at the time of writing. Oilseed rape had experienced a period of gains on the back of news that China would relax its Covid-19 restrictions. This increased the demand potential for both vegetable oil and meal with energy markets following the same pattern. The lack of improvement in South American weather for its soybean crop plantings and development also resulted in strong gains in the oilseeds market.
There are subsequent concerns over the speed of the global economic recovery, which forecasters now predict will remain slower and for longer. This reversed gains in crude oil and other energy sectors. In addition to these global factors, we continue to see a heavy supply of world rapeseed in an environment where demand remains less certain. Closer to home, ex-farm rapeseed prices in England experienced a brief rally to £500/t in some places. However, prices have now slipped back.
Mike Ayers Frontier| SFI – annual health and welfare due to launch this month
The Sustainable Farming Incentive (SFI) annual health and welfare review provides funding for an annual vet visit. Farmers with cattle, sheep and pigs can get funding to pay for a yearly vet visit, from a vet of their choice.
The review is designed to:
• reduce endemic diseases such as bovine viral diarrhoea (BVD) in cattle, porcine reproductive and respiratory disease (PRRS) in pigs and increase the effectiveness of worming treatments for sheep.
• improve the welfare of animals.
• increase productivity.
• make sure the use of veterinary medicines and vaccines is appropriate.
• be primarily for the farmer, and not used for inspections or compliance.
Payment rates are:
£684 for a pig review
£436 for a sheep review
£522 for a beef cattle review £372 for a dairy cattle review
DEFRA are preparing to open the review up to all eligible livestock farmers later this month.
| AMC - Tales Of The Unexpected
The unprecedented volatility in input and commodity prices seen over the last 12 months, combined with the recent turbulence in financial markets, is a stark reminder, if ever one were needed, of the importance of structuring finances to ensure that businesses can cope with the unexpected.
AMC have been specialist lenders to agriculture since 1928 and remain committed to supporting the industry through good times and bad.
In such turbulent times, AMC’s unique selling points have potentially never been so valuable:
• A commitment for the term of loan, with no reviews of lending margins or the decision to lend *
• Terms of up to 30 years to reduce the monthly cost of repaying the debt *
• Long term interest-only loans which can, in the right circumstances, make time-specific opportunities (like buying neighbouring land) a more comfortable proposal*
• Fixed rates of interest for anything up to 30 years
To find out more about how AMC may be able to help your business face the unexpected, speak to James Thompson.
* Subject to AMC Credit criteria and your obligations to AMC continuing to be met
AMC loans available for business purposes only, provided on a secured loan basis. Minimum AMC standard loan £25,001. To meet customer requirements, lending criteria will vary. Lending is subject to status.