UK arable farmers are speeding up input purchases, after a
slow start to the year, Wynnstay Group said.
The UK grain trading-to-farm supply business, said trading activity
over the four months to February 29 had been "subdued".
But arable input demand is on the uptick, the company said in a trading statement to be given at its annual meeting.
"Demand for arable products has gained momentum over
recent weeks after a slow start and is up to the levels of the prior period,
with Wynnstay also well placed for the anticipated spot trade," the group said
Trend toward spot
Ed Hugo, at broker VSA Capital said the downbeat start to the year
"The UK market is currently seeing a trend away from forward
purchases and towards spot purchases."
"This has especially been visible in fertilizer and we would
therefore expect Wynnstay's fertilizer volumes in particular to pick up as a
result in the coming months," Mr Hugo said.
Feed business under
Wynnstay's grain trading business is enjoying strong
volumes, even as prices remain low.
volumes have increased over the equivalent period last year although, as
expected, margins remain under pressure."
Meanwhile, the feed business has come under pressure due to
the unusual availability pasture over the winter.
"In the agricultural division, demand for dairy feed
was reduced over the mild winter period however poultry, beef and sheep feed
sales remain buoyant, in line with previous years," Wynnstay said.
Wynnstay shares took a tumble back in January, when the company
warned its outlook for sales was becoming "more cautions".
Shares hit an 8-month low, as the company warned of low farm
gate prices, which were eating into farmer income.
Phil Carroll, at Shore Capital, said on Tuesday that Wynnstay
still boasted "a resilient model that leaves it well-placed to deliver growth
over the medium-term as agricultural output prices return to more realistic
Mr Caroll also suggested that some mergers and acquisitions activity
could be on its way, saying that Wynnstay might "potentially capitalise on
acquisition opportunities in the sector in the shorter-term".
Wynnstay shares were down 4.8% at 450p in afternoon deals in London.