Cereal flexibility is message

31 January 1997




Cereal flexibility is message

IN an increasingly volatile grain market which has seen cereal prices tumble £20/t since last May, cereal growers must become more flexible, both in selling and when planning cropping.

That was the thrust of merchant Michael Banks message to producers at a Banks Agriculture meeting in Lincs last week.

Still reeling from the latest strengthening of sterling, Mr Banks outlined how currency changes alone had stripped £20/t from UK grain prices since May.

The result had been a seven months bear market – probably the longest for 50 years. Even so, and despite the latest green pound revaluation trimming another £5/t off Intervention, the price was still higher than the farmer return of £73/t he had predicted in 1992 for the 95/96 season.

With futures markets, especially in Chicago, fluctuating wildly, he had several pieces of advice for growers.

"The safest thing is to do your budget and as soon as you see the market go above it start selling." One large farming company had already switched to that policy with some success, locking into margin and profit, he claimed.

Marketing through more than one outlet was advisable, he added.

Difficult times

But he suggested difficult times made co-operatives less attractive. Large companies with more staff were better placed to assess broader trends, he explained.

With wheat at only £80-85/t, area aid began to assume a much higher profile and alternative crops such as pulses and linseed looked increasingly attractive – even for those growing 10t/ha (4t/acre) of wheat.

VOLATILE MARKETS

* £20/t lost since last May due to currency alone.

* Seven month bear market longest for fifty years.

* Green pound revaluation cut £5/t off Intervention.

* Budget and sell as soon as in profit.

* Area aid more important, so reconsider breaks.


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