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UK set for bumper harvest but selling remains a concern

Joel Durkin looks at UK harvest progress and how farmers may look to market their grain during an almost impossible year.
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Farmers are expecting an almost record harvest, with yields as high as 10-12 tonnes/hectare in parts of the UK.


But while the crops in the ground are looking good, continually sliding prices are chipping away at profit margins and negating much of this year’s success.


And surplus UK grain means larger amounts being marketed to export outlets where it will need to compete on European markets at a time when supplies are high and the exchange rate is making UK produce more expensive.


Experts shared their thoughts on the progress of the UK harvest and the options available for farmers with grain to sell.




Producers may be looking at one of the largest crops ever seen.


Harvest generally began toward the end of July and early indications suggest yields could be as high as 10-12 tonnes/hectare (4-5t/acre).


But much of the growing season has mirrored conditions around the world, with a bumper world harvest causing prices to slide almost £40/t and dragging futures prices down to £122/t.


Jeremy Cole, managing director of Agricole UK, said: “This price drop is basically due to the increased world supply of wheat and reduced livestock and human demand caused by high prices in previous years.”


The situation was underlined by Andrew Ward, an arable farmer cropping 647 hectares (1,600 acres) in Leadenham, Lincolnshire.


Mr Ward said the yield potential of his crop was ‘quite good’. He claimed to have sold 35 per cent of crop forward but wished he had sold 60-70 per cent.


And as the crucial period determining quality began a few weeks ago in the run-up to cutting, concerns over European wheat quality began to surface, splitting the price difference between milling and feed wheat.


Jack Watts, AHDB/HGCA senior analyst for grain and oilseeds, said: “The premium milling market is taking some support from wet weather issues in France.


“There are incentives for farmers to find and segregate quality and keep them segregated.”


Mr Watts suggested the difference between milling and feed wheat could be as wide as £25-30/t.


He said high yields can often impact on protein levels but advised farmers not to merely assume their wheat was feed quality and take advice about milling premiums.


Going forward, ODA UK claimed the overall outlook was bearish and recommended farmers should be 50 per cent protected even if demand begins to rise.


Hedging Advice

  • Those who feel the market will not rise should sell everything they produce.
  • Those who feel the market will rise should perhaps store their produce
  • To protect against those decisions being incorrect the farmer should be looking to hedge their sales, with futures or options
  • The cost of a May 2015 call option is £10/tonne, about 8 per cent of the crop’s value. This means it is actually cheaper to sell the physical grain at the prevailing low price and apply a call option, which will give a ‘profit’ if the market rises more than £10, than it is to store it in their own or a merchant store
  • Hedging also means the cash can be used for the businesses liquidity and there is no risk of a market fall

Jeremy Cole, managing director, Agricole

Oilseed Rape

Oilseed Rape

With harvest all but complete, the UK looks to be set for a mixed crop with some farmers receiving good yields and others disappointed.


And this mixed bag has been compounded with a long and sustained decline throughout the growing season.


Paris futures prices have fallen about £85/tonne since April to roughly £260/t and a lack of domestic demand means farmers are receiving prices less than £220/t in some cases.


But the trade has stabilised recently, with concerns developing over US soybeans.


Mr Watts said: “There is some dryness in the US soybeans which has taken some confidence away from the market. There has also been a bout of buying for soybeans.”


Andrew Hill, grain origination team leader at Frontier, said while the short-term outlook may be bearish, there was ‘inevitably’ something around the corner which could change price direction.


Mr Ward said: “We have slipped up and not sold anything. We are hoping for things to pick up a bit but we will be taking options on the rape.”


Hedging Advice

  • Hedging is possible for approx €20/tonne (£16/t), or 6 per cent of the crop’s value
  • The farmer must decide the chance he feels of the market moving up by 6 per cent between now and May next year. I believe it is almost a certainty, so anything sold now should be sold with a hedge of at least 50 per cent

Jeremy Cole, managing director, Agricole




Those growing feed varieties are staring down the barrel with prices less than £100/tonne.


With a bumper wheat harvest expected, feed barley will have to compete directly on the European market. But the plentiful crop and strong pound are hammering down prices for many UK farmers.


Winter barley is nearing completion ahead of schedule.


Spring barley has begun in the South, but is likely to start in most areas within the next two weeks.


Simon Barry, chief executive at Highland Grain, a Scottish co-operative largely supplying the whisky industry, said: “It has been reasonable in terms of yields but malting samples have been mixed in this area. Quite a lot have failed to make specification.”


Mr Cole suggested there were unlikely to be any significant rise in prices around the corner and selling forward to November may be a good option.


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