Gleadell Viewpoint Spring 2014

Page 1

SPRING 2014

By Appointment to her Majesty The Queen. Supplier of Quality Seeds Gleadell Agriculture Ltd Lincolnshire

VOL 12, ISSUE 1

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www.gleadell.co.uk

Decisions, decisions! What to do about new crop marketing? As we go to press we are three to four months away from the UK harvest beginning. Wheat and rapeseed production looks like rebounding significantly from the diminished crop sizes of the past two marketing seasons. Likewise across the world, apart from part of the US affected by dry weather, supply is seen as ample and crop prospects appear good. Until recent events in the Ukraine, prices have not attracted much farmer interest for any commodity.

Historically £150/t to £160/t ex farm is a high price for feed wheat – this is a fact and not a matter of dispute. It is surely sensible to sell something at this sort of price, and to sell a bit more if prices rise further.

In round numbers, as we stand today, the downside potential for new-crop wheat prices is about £20/t, whilst the upside potential could be up to £50/t if an as yet unforeseen significant weather event were to occur in the next few months or if events in Ukraine result in logistical issues or sanctions that radically affect grain flows or market access. Of course, the chance of a bull market never disappears until northern hemisphere crops are in the barn and we have already seen, and will see more, price spikes that represent good marketing opportunities.

The graph below showing Gleadell’s Jan–Mar 2014 wheat pool result illustrates the inherent volatility of today’s grain markets. Farmers selling on the open market would have had to sell most of their wheat before harvest to beat the average £170/t achieved by the pool – in reality hardly any did that.

The danger for harvest market prices in particular, if a proactive market approach is not taken, is that we could see crop marketing forced into a narrow period of time as we all wait for the blue touch paper to be lit and prices to sky rocket. So what could we do to mitigate the risk of prices turning south?

Using pools and a range of other contract types has become a key tool in managing risk and recent weeks have shown us the unpredictable and volatile nature of the global market we all live in. It is almost impossible to forecast where, for example, the Ukrainian situation ends up, or what the longer-term impact for our markets might be, however price supportive it feels right now. David Sheppard, managing director, Gleadell Agriculture

www.gleadell.co.uk

Contents 02

Gleadell traders provide key background information on the current grain, oilseeds and pulses markets and assess prospects for the harvest 2014 crop.

04

06

Market Price Market Price

180 180

Pool Base Price Pool Base Price

07

Increased production coupled with potentially lower crop margins could put new–season prices under pressure. But, says fertiliser manager Calum Findlay, nothing is certain in a global market.

Average Pool Price

08

160 160

150 150

140 140

Aug13 Sept13 Oct13 Nov13 Nov13 Dec13 Dec13 Jan14 Jan14 Feb14 Feb14 Mar14 Mar14 Oct12 Jan13 Feb13 Feb13 Mar13 Mar13 Apr13 Apr13 May13 May13 Jun13 Oct12 Nov12 Nov12 Dec12 Dec12 Jan13 Jun13 July13 July13 Aug13 Sept13 Oct13

@gleadells

FERTILISER FOCUS

Average Pool Price

170 170

GleadellAg

SPOTLIGHT ON SEEDS The latest Recommended List contains some exciting wheat and OSR additions that will prove popular this autumn. Seed manager Chris Guest previews some of the best.

Gleadell Jan - Mar 14 Wheat Pool Result (£/t)

190 190

ENSUS Ensus, one of the largest bioethanol plants in Europe, has new owners who are investing £50m to make the plant more competitive, potentially very good news for farmers.

Gleadell Jan - Mar 14 Wheat Pool Result (£/t) 200 200

MARKET OUTLOOK

CAREER CHAMPIONS Bright Crop is a recently launched initiative to help attract new talent into the increasingly progressive and diverse agricultural sector. Gleadell has been involved from the start…

Gleadell Agriculture Limited


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