February 6, 2017
Secure your markets in the face of surging spring plantings
Focus on lower market risk opportunities in your spring cropping and secure your outlets as early as possible this season, advises Agrii head of crop marketing, Paul Taylor as another substantial increase in spring plantings is set to put serious pressure on key crop prices.
Speaking at a special early spring Masterseeds briefing this month, he explained that the major increase in spring seed demand being recorded by the business for the second year in a row will see supplies of spring barley, peas and beans, in particular, shooting-up.
“There will definitely be crops that struggle to find a good home this season,” he stressed. “The 600,000 ha crop of spring barley we could well have, for instance, would generate an exportable surplus of 750,000 tonnes. Yet the short sea European export demand for malting barley is only around 2 million tonnes and, while the weakness of sterling will help, we have to compete with France and Denmark both of whom have significant freight cost advantages.
“We’re starting to run out of domestic customers for spring oats and exports really aren’t price competitive,” Mr Taylor added. “Equally, many premium pea and bean markets are shaping-up to be more than well-supplied.
“All this puts the onus on identifying cropping opportunities with a lower market risk to serve particular markets and securing them as early as possible with effective contracts. As buyers, we have putting a lot of effort into doing just this on behalf of our growers in recent years, identifying particular consumer needs, matching these to varieties and developing industry-wide seed-to-supply partnerships to produce them on contract.”
Despite doubling the volume to 65,000 tonnes in 2017 to meet Budweiser’s full UK malting barley requirement, Paul Taylor reported that all Agrii/Glencore/Crisps Malting contracts with AB InBev for the specialist heavy land barley, Explorer have already been filled.
However, he pointed out that growers can still take advantage of flexible Agrii contracts for Propino, RGT Planet and KWS Irina with Glencore, alongside their Scotgrain contracts for Concerto, Chronicle and Laureate.
“If you can handle them, naked oats are a good opportunity,” he observed. “Unlike conventional oats, demand – for gluten free human and pet foods and high quality horse feeds – remains well ahead of supply. As a result, we have some attractively-priced contracts offering premiums of up to £45/t over feed wheat available through GB Feeds.
“We also have useful contracts for Sakura and Kabuki marrowfats, Daytona large blues and Mantara maple peas too. And, in an exciting new development taking advantage of Glencore’s global reach, we have secured a major opportunity to supply strong demand for human consumption yellow peas in India and China. At a £50/t ex-farm premium over a fixed base price, Mascara contracts for 2017 are especially attractive for a simple specification carrying no risk of bleaching issues.”
Emphasising Agrii’s commitment to work with key industry partners to develop market opportunities and marketing mechanisms enabling growers to minimise risk as well as improving their earning power, Mr Taylor went on to suggest that 2017 could well be exactly the right season for many to make the most of pool marketing.
“With a significant over-supply of quality wheat as well as barley on the cards and currency volatility a key market driver, de-risking a proportion of your crops through a marketing pool this season looks like being especially valuable,” he said. “That way you avoid harvest discounts and allow professional marketeers to take the greatest possible advantage of what could well be a roller-coaster of a year for prices.
“The Harvest Trust pools we are relaunching with Glencore for wheat, barley, rapeseed and beans for the coming season to help here are available for movement at harvest or to mid-January, with full-season wheat and barley pools for movement through to the end of May. As well as providing extra security alongside direct selling through traders or the Grainman and Grainmate programs, they have optional staged cash-flow payments built-in.
“However you decide to market your crops this season, planning to take advantage of the best market opportunities as they become available and acting early and decisively to secure them will be more important than ever,” concluded Paul Taylor.