Schoffel

So, the unofficial Young Farmers Rally weekend in Blackpool has been and gone. Dropping the youngest member of our team and a carload of his mates off at York station Friday morning. We were greeted at the last set of traffic lights with an ambulance at full trot, all lights and siren ablaze. This prompted a few fatherly words of advice to the carload of 21-year-old lads, like; make sure you stay out of the hospital and the police station this weekend. Hoots of derision all round as they replied what about the lap dancing clubs, brothels and strip clubs? Help yourself I replied there is plenty of antibiotic left in the jar from the lame heifer we jabbed yesterday, and the needle will be good for another use or two!

Fast forward to their arrival home, voices hoarse from alcohol, shattered from lack of sleep, it appeared the whole of Blackpool had welcomed with open arms the 9000 Schöffel’s that arrived to party! With the landlord’s and landladies of the Blackpool Hotels renting rooms for cash and turning a blind eye to how many slept in them, breakfast not included!

The one thing the lads had not managed to find was a seafront tarot reader or fortune teller that could tell them what price wheat was going to be next week.

The ‘Bull’ market continues to find ever more news to feed the current record price rally. The latest, this last weekend, the heat wave in India that prompted the Indian government to suspend all overseas sales, despite previously advising it would be able to fill the World wheat shortfall. Under ‘normal’ years this would have minimal impact as at approx 8.5 million tonnes, India is one of the smaller World exporters. Russia 39 million, EU 36 million, Australia 24 million, Canada 24 million, USA 21.1 million, Argentina 14 million, Ukraine 10 million, India 8.5 million: Source Bloomberg 2022/2023 expectations. Last week’s USDA report put UK wheat production expectations for 2022/2023 at 14.4 million tonnes and exports at 0.9 million tonnes. Both these figures are some ways below the local grain trade crop expectations which would have production based on sowings and last seasons kind autumn at around 16.0 million with exports up similarly.

Because of all this bad news and subsequent speculation, this week old, crop wheat hit £350 per tonne ex farm in East Yorkshire. On Monday, this week wheat for November 2022 traded at £355 per tonne on the London futures exchange whilst wheat for November 2023 traded at £295.

The latter of these trades is the one in my opinion worth greatest consideration. For now, what is left of old crop harvest 2021 and new crop 2022 will take care of themselves based on the Ukrainian/Russian war and the weather news around the World. However, November 2023 is 18 months away. Ammonium Nitrate is going to hit the farm this next month at £630-£700 per tonne. This will be applied to the crop to be sold Sept 2023-June 2024! Wheat sales made now for autumn 2023 will lock in more profit per hectare than those sales made 18 months since. Back then, wheat was £150 per tonne and fertiliser was below £300 per tonne.

The Blackpool hoteliers took cash up front and saved on the eggs for breakfast. A wheat sale for November 2023 might just hedge expensive fertiliser and prevent having egg on face or egg down the front of your Schöffel. Especially if this ‘Bull’ wheat market 18 months from now, is no longer sunny side up!!