New way to report grain prices

INCREASED VOLATILITY in the grain market has led the Home-Grown Cereals Authority to change the way it reports its prices for the first time in 30 years.

While the old corn returns gave an easy-to-follow indication of ex-farm values, globalisation of the market place has rendered that format inaccurate and out of date, says Alastair Dickie, director of crop marketing.

The HGCA has moved to reporting delivered prices, from which farmers can work out their individual returns more accurately.

“The market is now too quick and sophisticated for the HGCA ex-farm prices to be used as they have been for the past 30 years. They just don‘t do the job any more.”

The old corn returns prices were published on Mondays, but related to sales made for the week ending the previous Thursday.

Many prices were therefore over a week old by the time they were released. “The market may have moved by £5/t since then.”

The new delivered values are based on Thursday‘s closing prices and are published for subscribers to the HGCA website on Friday and included in the MI Bulletin on Monday.

The new delivered price summary is also available every Friday from FWi‘s prices section.

There are also other advantages, says Mr Dickie. Producers can now calculate their own price for their grain, based on what local consumers are paying.

All grain prices are founded on what a processor or exporter will pay on a certain day, says Mr Dickie.

Farmers then deduct a distributor‘s margin and haulage to reach their specific ex-farm value.

By working prices back in this way and cross-referencing them with futures prices, farmers gain a better understanding of the market, says Mr Dickie.

This enables them to take advantage of any short-term blips and ensures that they are getting the most from their buyer.

The organisation will continue to collect ex-farm corn returns as required by DEFRA, he adds. “Some people have contracts based on them – these will still be valid.”