14 February 1997

Internet could open up futures market to more

Last week saw the first big event dedicated solely to farm computers and the new information technology. FARM-IT, organised by the Royal Agricultural Society for England at Stoneleigh, drew almost 2000 visitors, among them Tim Relf

AS INTERNET awareness increases, so more farmers will use the futures market, Home Grown Cereals Authority economist Steve McGrath predicted at last weeks FARM-IT event at the NAC, Stoneleigh.

This seasons volatile grain market has highlighted the need to limit risk, he said. Last June, for example, someone could have locked into a March sale feed wheat price of £118.50/t, compared with a spot value of nearer £90/t now.

"Studying the futures market – currently updated twice daily by the HGCA on the Internet – provides a good indicator of where the physical market is heading."

According to Simon Foster of BDF Commodities, the end of the Potato Marketing Board will introduce more volatility into the potato market, too. "There will no longer be a bottom in the market, prompting more farmers to adopt risk-minimising measures."

Grain values, meanwhile, are so closely connected to the value of sterling, that it only takes a few minutes for values to change 50p or 60p/t, says Mr Foster.

And with a minimum trading lot size of 100t on the futures market, large sums can be involved. So up-to-date prices are vital.

Doug Thow of the London Commodities Exchange agrees the Internet has a role in increasing awareness of futures.

But the only way to get "real-time" prices is from the LCE or a news agency, he points out.