By Tim Relf
WHEN it comes to selling grain, farmers have started 1999 as they ended 1998 – sitting on their hands.
Uninspiring prices and a “wait and see” attitude to discover whether the new euro prompts a weaker sterling has left the market quiet. “Theyre certainly not kicking the door down,” says Paul Crump of NB Camber.
Feed wheat was worth £75-£76/t ex-farm early this week, he says. “If farmers werent prepared to sell pre-Christmas at these levels, theyre not going to jump in now.”
Tight supplies reaching the market have limited price falls, says Dalgetys Trevor Harriman. But, with exports having slowed after the early season flurry, UK farmers could be storing up problems.
About 1.8m tonnes still needs to be shipped by the end of the season to avoid a carryover, he notes. “Not impossible – but we need the business and, at the moment, there is hardly any on the books.”
Compared with France, UK prices are unattractive to foreign buyers, he adds. “Our competitiveness is virtually zero.”
James Ross of Continental Grain says: “If exports do not increase, we will be looking at an over-supply situation.”
Farmers who – for space or cashflow reasons – have to clear barns within four to six weeks should consider selling immediately to catch the “starved” market. Those who hang on until May or June may find trade is helped by further weakening of sterling.
Barley is changing hands for £79-£80/t ex-farm, adds Mr Ross, with intervention putting a floor in the business. “No-one is going to rush out and sell knowing there is a guaranteed support price.”
Even if the open market value is £1-£2/t below intervention level, quicker payments and more flexibility on quality can still make it a better option. “Intervention is a good tool – but its harder work.”