Time

For those of you that did not take your profit last month and are still at the table in the farming casino, the grain markets continue to trend ever downward.

Domestically, the UK wheat market is weighed down with thoughts of plentiful supply.  A UK wheat production figure of around 14 million tonnes, aligned with six months import figures of 1.17 million tonnes of wheat and record maize imports for the same period of 1.29 million tonnes push prices ever downward.

Globally, key world exporters of wheat and maize have trimmed their prices to 14-week lows in order to keep large crops elsewhere in the world on the move.

New crop continues to drift also. The pressure of a potentially larger than average UK cereal crop based on both areas sown and current superb crop condition is weighing heavily on the market. Traditional early season grain values based on potential export business are non-existent. Both buyers and sellers are reluctant to commit to business for fear of Brexit based export/import taxes and tariffs affecting the profitability of any deals already done.

For those with old crop grain still to market, the ‘Fundamental numbers’ currently have the beating of any hopes of Political manoeuvring around Brexit and USA/China trade deals improving market prices.  It has been said here before, but current old crop values still have PROFIT within.

New crop is now a different animal altogether.  Current harvest levels are beginning to slide toward the cost of production of a tonne of UK grain.

Marketing strategy for 2019 crop could therefore potentially be driven by another major variable; Cash Flow! Early season high prices put cash in the bank. Autumn farming costs of fuel, fertiliser, seed and rents all paid, make for strong confident holders of grain.  Cost of production varies from one individual to the next, historic costs, variable cost and yield all have their part to play.  Budgeting when working at tighter margin levels becomes ever more important.  Knowing what has gone before helps us focus, understand and plan for now and the future. Historic average yields and selling prices can influence our strategy. When prices are below the cost of production then cash flow will fuel the market.  Bills must be paid, and grain will be sold whatever the price to meet cash commitments.

Harvest 2018, and the best marketing strategy would have been to take the money and run.  Sell your grain at harvest for whichever month you saw fit knowing that prices were significantly above budget and cost levels and profit would follow to the bank. Time and the perception that it would last forever were your enemy!

Harvest 2019, for those who have not already made some early sales at better than current values, know your costs, know your historic yields, know your cash flow timing requirements.  If prices are around or below cost of production, sell only what you need to cover costs, when you need to cover costs.  Time is now your friend.  Time for politics, weather and market fundamentals to bring profit back to the table.


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