March 2019 Agrifacts

Page 1

AgriFacts March 2019 Your monthly roundup of news, prices and other farming matters

Market Commentary It’s now only a few of weeks to go until the UK leaves the EU. Or is it? Bookies odds have been consistently predicting an extension to Article 50. Some suggest this could be for a ‘short’ period, others say until the end of July, yet others fear it could extend into an indefinite period. Would this extension be in place, the UK remains a defacto member of the EU, with all the rights and obligations that entails. The current trade tariff regime will also apply. With an element of uncertainty likely to be resolved, this has allowed sterling to recover sharply. Against the euro, the pound has broken through (strengthened) a relatively narrow trading range that has been in place since September 2017. The negative impact of this on our domestic wheat prices is in addition to the sharp price movements overseas. World grain prices plunged dramatically in February. Russia, Australia, US, Ukraine and EU values all show steep losses for February. Indeed, France’s futures prices are £15 lower than at 1st Feb, while US wheat values are some £18/t down. LIFFE wheat futures ‘only’ shed £9 over the same period. As such the price spread between the UK and France has moved from around -£8, to +£2 in three weeks, in doing so making the UK currently attractive again for imports. While there are numerous reasons why the global sell-off occurred, the trigger was a poor reading for US sales a few weeks back. Generally favourable crop conditions, slow exports from the EU and US, question marks over the level of remaining global import demand alongside the dwindling amount of time before freshly harvested supplies are available all contributed to the price declines.

has offered to buy $30bn worth of US agricultural produce. If this were to eventuate, then Chicago’s futures markets would certainly sit up and take notice! Furthermore, markets are currently pricing-in almost perfect global crop conditions. This, before the world’s largest crop – US corn – has yet to be planted. Last year, Europe’s crop yields suffered from very hot and dry conditions in May and most of Continental Europe and the UK have yet to recover properly from highly deficit soil moisture conditions. That said, UK crop conditions currently look very good nationwide, with the recent dry and warm spell allowing farmers to start fieldwork. Without a repeat of last year’s late-season heatwave, new crop could be the first season in the last three when the UK will be a net exporter. The price spread between the UK and the continent will need to reflect this fact, with currency movements highly influential again. Good news greeted the grains industry recently, with the announcement that Ensus, the ethanol factory in the north east, will be re-opening in March. Time will tell how much grain they will use, but on paper imported maize would seem the most logical choice in the short term. Rupert Somerscales Senior Consultant ODA-Agri

On the positive side, the world balance sheet remains relatively tight historically, with a very low stocks/use ratio when China is excluded. In an attempt to break the negotiation deadlock between the US and China, the latter

Month (ex farm) Midlands

Feed Wheat

Feed Barley

Oilseed Rape

Currency

Mar 2019

£159.00/t

£134

£303

£/€ = 1.1583

Apr 2019

£160.00/t

£135

£304

€/£ = 0.8633

May 2019

£161.00/t

£136

£305

$/£ = 0.7619

Milk Data

Avg Monthly Price

UK Farmgate Milk Price

29.85ppl

Fuel/Straw/Silage

Price

Fertiliser

Price

Red Diesel

57.1p/litre

34% N AN (bags UK) £/tonne

£277.00

Big sq Baled Wheat Straw

£54.00/tonne

0:24:24 blend (bags) £/tonne

£287.00

Big Bale Hay

£130.00/tonne

20:10:10 blend (bags) £tonne

£273.00

p/kg dwt

Finished Steers

Finished Lambs

Finished Pigs

347.1

419.7

143.8


Tariffs on food imports Red Tractor has World Leading Standards A recent international benchmarking study has found that the Red Tractor Assurance has world-leading standards. Looking at the main international schemes, the results recognise that the breadth and depth and the factors covered by the Red Tractor are second to none, with the scheme consistently being the world-leader in traceability and food safety. These findings strength and reaffirm the importance of the Red Tractor Scheme within the UK market, allowing the consumer to have confidence in the quality of food produced, alongside the high levels of animal welfare and environmental standards that are required to be met by farmers. Shoppers are able to look for the logo and be assured that the food that they are purchasing is of the upmost quality, £13bn of British products carry the easily identifiable logo. Although a world leader, the study found areas that the Red Tractor could develop in order to improve the schemes to allow for even higher standards to be met. These areas covered the planned developments that the Red Tractor currently has, looking towards moving into specialist areas such as higher welfare, environmental enhancement and organic production. Red Tractor Assurance will be launching a new confidential phone line that will go live in June. This will allow any member of the public or farmer to report anyone who they believe are failing to meet the high standards of the scheme. This new phoneline ‘Farmed with Care’ will be available 24/7, 365 days a year and aims to assist in the improvement of compliance throughout the entire supply chain.

Consumer groups are opposing the suggestion of tariffs being applied to food in the event of a no-deal Brexit, stating that it will cause an increase in prices, putting a burden on British Consumers. They believe that abolishing tariffs would help lower the price of meat by 3%, encouraging UK markets to actively compete with the rest of the world. However, it is argued that the introduction of a tariff is essential in order to offer protection against imports that do not meet the UK Standards. It has been proposed, although not confirmed, that a potential policy would apply a higher tariff to products such as beef and lamb, which is readily available in the UK, whilst products that are not home produced, such as citrus fruits would be tariff free. Those products that are trading at, or close to world prices would have lower tariffs in comparison.

Key Dates Date

Regulation

Restriction

Available now

BPS

Online entitlements and land transfers can now be completed, transfers must be completed by 15 May 2019

Available now

Countryside Stewardship

Countryside Stewardship 2019 Four Wildlife Offers applications opened on 18 February 2019. Apply by 31 July 2019

Available now

Countryside Stewardship

Mid-Tier self service application packs available via email, the request deadline is 31 May 2019. Applications close 31 July 2019

Available now

Hedgerows and Boundaries Grants

Hedgerows and boundaries capital grant applications are now open. Applications should be made by 30 April 2019

1 March

Cross Compliance

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 1 March until 30 April.

13 March

BPS

BPS Online Applications available from 13 March. Submission deadline is 15 May 2019

31 March

Cross Compliance

Water abstraction licence holders should expect annual bills or first-part charge if twopart tariff agreements are held.

1 April

VAT & Tax

VAT Registered businesses with a taxable turnover above the VAT Threshold are required to use the Making Tax Digital service in order to keep their records digitally and use software to submit their VAT returns

1 April

Cross Compliance

Ban begins on burning heather, rough grass, bracken, gorse or vaccinium other than in upland areas

1 April

Cross Compliance

28-day window opens for winter or year-round water abstraction licence holders to submit readings to environment agency

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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