KEEPINGTABSONMARKET…

3 September 1999




KEEPINGTABSONMARKET…

FOR Ian Wallis of merchant Cargill, Mark Wainwright is a model customer.

North Yorks farmer Mr Wainwright tracks the grain market closely to catch small, but worthwhile, price rises and contacts his merchant up to four times a day when selling grain to keep up with the speed of price movements.

"The days when growers could sit back and still make a decent profit are long gone. Now the priority must be to secure a price that allows an acceptable level of return. There is a big difference between not liking a price and not making a profit."

For those with less time to sell their grain, contracts and forward selling are essential tools in managing risk and securing end markets, he says.

But fixed premium contracts only protect the premium, he warns. For top returns, the feed element should be priced before final quality is known.

To make the most of this, and to increase returns, more use should be made of forward selling, says Mr Wallis. "Many growers have held back for a better price in recent years, only to find spot values even worse.

"Early last year November wheat contracts were available at £80/t. By the time November actually arrived the price was down to around £73/t."

Although the drop in autumn sowings means prices are more likely to stay firm, if an acceptable gross margin can be achieved it makes sense to sign some tonnage up, he advises. "At least some income has been protected, even in the worse case scenario."

Few producers have access to live electronic prices making it important to maintain close contact with a number of merchants. The more information the farmer gives the merchant the more likely it is that he can help, Mr Wallis says.

"Too many farmers still sell in the same month every year and have no plan. But the best growers use several different types of marketing and always have a clear plan."

Trader Gary Sharkey of BDR Agriculture says information on websites such as the BDR site or FWi give a good indication of market movements.

But markets can change rapidly. There is still no substitute to picking up the phone, says Mr Sharkey. He expects marketing pools will gain favour as time gets tighter and farmers prefer to leave the responsibility of marketing to their merchant.

The main problem is finding the time to absorb all the information available, says Richard Whitlock of Banks Agriculture. "It is almost impossible to keep up. Three years ago it would not have mattered so much, but these days it can mean a loss."

Mr Whitlock has also seen many producers turn to marketing pools. The volatility of prices over the past few years has left many farmers punch drunk with worry, he says.

"If you can find a merchant with a good track record that is often a good move," he says. "Rather than assuring the best possible prices the pool system is a guarantee of not getting it significantly wrong." &#42

SMALL PRICE RISES WORTH THE EFFORT

Mark Wainwright is keen to extract small, but worthwhile, price rises from the increasingly volatile grain market.

To achieve that he tells his merchants when, and at what price he will sell at and then works hard to keep up to date with market developments.

Although he receives the weekly bulletin from a number of merchants this can only be relied on for a general picture due to the timeliness of the business, he says.

A fax which arrived 15 minutes ago is old news. "In reality the market may have moved up or down £2/t and I am trying to be £2 up rather than £2 down." He has all his produce sampled so he knows what market his varieties will suit.

But Mr Wainwright admits that he also has to be realistic with his selling price. "I just want a good average."


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