CORPORAL JONES

Some might frown at blowing your own trumpet, but if you don’t most likely no one else will.  A brief look back over the last 5 months comments in this paper, the common theme has been that the price of wheat for harvest 2019 was not to be sniffed at, forward sales at the prices being offered should not be dismissed as a poor price.  At the time of writing, this month’s article old crop July wheat is in plentiful supply leaving the farm gate at £137 per tonne!  There is not a single consumer in our region that will look at pricing new crop August wheat, and why would they, if the bit left is £137 per tonne then logically the whole barn full of the new season will probably be less.

The current value of sterling v euro is 1.1082 a six-month low. The value of sterling v Dollar 1.2461 a two-year low.  Even with sterling at these levels UK cereal prices need to fall further, (approx £4 per tonne more than our European competitors) if we are to become competitive in the export markets and move some of our inevitable 2019 crop surplus.  The problem here is compounded firstly by French and American markets falling in tandem with ours, weighed down by their early season harvest results and crop reports.  Secondly by Brexit, or lack of, so that no export trade at all is possible post October for fear of tax and tariff implications.

So what to do?

Those with harvest wheat to sell, should target September sales, NOT August.  There is an outside chance you might still make £140 per tonne.  For those looking further forward the May 2020 London Liffe wheat value would suggest that £150 per tonne ex farm may be available towards the end of this coming harvest year, possibly in June for those prepared to make a firm offer.  As often previously stated £150 per tonne is historically a very high wheat price.

 Uncertainty will play heavily on the market, the value of sterling will not stay at these low levels, economic confidence post Brexit will return, sterling will firm as confidence returns and exports of any potential UK grain surplus will be a struggle. On the flip side there is a lot of harvesting around the world to be done and a lot of weather still to come.

The plan of this Trader would be, top up your early season sales to around 50 percent of the crop.  Sell 25 percent for May/June at levels around £150 per tonne as a hedge against post Brexit blues, a possible strengthening sterling and a lastly what looks like a potential huge crop in the barn.  This will leave approx. 25 percent to keep you at the table in the ‘Farming Casino’.  Given ‘Time’ you may then prove to be ‘Smarter than the Average Bear’ and instead of listening to Private Frazer shouting ‘we’re Doomed’, it will Corporal Jones, ‘Don’t panic Mr Mainwaring’!!

For those who wish to read the previous months articles they are available on our website.  www.andersongrainmarketing.co.uk