NOBODY KNOWS

All around the county you can hear it, the evening silence, the distinctive drum of a combine harvester working away is done for another year.  Autumn approaches, forward harvest grain sales have been delivered, surplus that would not go in the shed has been sold spot and moved also and the roller shutter door is now firmly shut on the grain store. 

Wheat harvest 2019 has been a whopper, estimates have moved from 15.0 million tonnes pre combine up to 16.5 million actual tonnes in the shed.  Globally increasing maize crop forecasts from America and disappointing US trade data are adding further pressure to the Chicago futures as the fund investors bet on a further fall in the markets to come.  Here in Yorkshire, cereal prices have rebounded from the discounted levels requiring immediate harvest pressure of movement. Current dollar, euro, sterling exchange rates are allowing cheap UK grain to head to the port for export.  Further export trade is reliant on UK grain maintaining its discount to Paris milling wheat futures and of course our excellent politicians and Brexit.

As we move into the autumn months, it would appear that in the pre-Christmas trading months of October, November and December there are only two things that will bring grain from the farm.   Individual farm business cash flow requirements and, or an improved price, and perception on farm that it represents a better opportunity than that currently offered.

For those who have read the previous months columns, you are now back in the ‘Farming Casino’. Our local consumers undoubtedly have a lot of grain to buy throughout the remainder of the year.  Having had the market all their own way for the past 9 months they are now content to cover their mill requirement almost on a week to week basis.  Farms with grain store doors firmly shut, money in the bank from early season sales and plenty of land work and drilling to contend with are reluctant sellers.

But here is the rub!

The buy and sell position of both mill and farm could be altered dramatically by outside influences.

Firstly, the value of sterling may yet swing dramatically up or down as Brexit meanders on.  The wider economic sentiment and perception of UK plc will have an impact on local grain prices.  Put simplistically, sterling up = wheat down and visa versa.

Secondly, as the UK, European and North American harvest comes to an end, attention switches to the Southern Hemisphere.  Warm dry weather in Brazil, low soil moisture and little rain forecast may yet see Brazilian weather have a big part to play in global and by default therefore Yorkshire ex farm grain prices.

Thirdly, President Trump.  The two largest cereal producing countries in the world go toe to toe. President Trump plans to hit nearly everything America buys from China with duties.  This would cover an astonishing 20 percent of all US imports.  In retaliation Beijing is preventing American access to its 1.4-billion-person market.

Meanwhile back in the Casino! Round and Round and Round it goes, where it stops nobody knows!