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UK farming in recovery mode, 'helped by ag price rises'

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Wynnstay Group forecast a "return to growth", spurred by a boost from improved agricultural commodity prices to UK farm demands, evident in feed, seed and fertilizer markets.

"The trading environment for farmers has continued to show signs of recovery," the UK farm retail-to-grain trading group said, flagging the boost from rise in ag commodity prices, "although from low comparatives".

UK values of farm produce have benefited not just from the recovery in world values of the likes of wheat and rapeseed, but from weakness in sterling too, which boosts the price in local terms of assets such as food commodities traded broadly in dollars.

Price gains

While sterling, trading at some $1.25 to £1 has recovered from the multi-year low of $1.20 reached in December, it remains 17% below levels ahead of the UK's vote in June to quit the European, which sent the currency tumbling.

London wheat futures are up 43% year on year, with cash rapeseed values, at some £355-60 a tonne delivered according to the AHDB bureau, up by more than one-third.

Milk prices have also shown strong growth, with prices offered by First Milk, for instance currently at 25.0p per litre, up from around 17p per litre a year ago.

Potato prices, at £266.24 a tonne in the free-buy market as of March 10, wee up more than 50% year on year, according to the AHDB.

In the protein market, pig prices, at 147.47p per kilogramme, are up by one-third year on year.

'Good fertiliser sales'

Wynnstay said that its agriculture operations had seen a rise on ruminant feed year on year, "reflecting national trends".

"Fertiliser sales have been good as farmers purchased ahead of anticipated price increases."

The fall in the pound has been seen as boosting costs of importer products, such as many nutrients, although CF Industries, which has a substantial nitrogen manufacturing base within the UK, last week surprised some observers by sticking by ammonium nitrate prices for March and April delivery.

"With a weaker pound and European [price] levels remaining firm, the new CF terms will put increased pressure on importers of ammonium nitrate," Gleadell, a rival to Wynnstay in some markets, said in a report last week.

CF had the "intention of capturing as much of the spring demand as possible", Gleadell added.

Spring seed demand

Indeed, farmers have been raising spring sowings, at the expense of winter crops, in an effort to beat infestations of black grass, which can be sprayed off in fields left fallow for the autumn.

Wynnstay termed "encouraging" demand for spring seed.

Spring barley is the most popular spring-seeded crop in the UK, attracting sowings of 683,000 hectares last year, with alternatives including corn, largely for silage, grown on 194,000 hectares.

In response to interest in the implications for agriculture of Brexit, and broader political trends, Agrimoney.com will next month produce a report 2017 Outlook for global agribusiness: Agricultural trade in the era of Trump and Brexit.

To register your interest for the forthcoming report please contact Rainy Gill at: rainy.gill@briefingmedia.com

By Agrimoney.com

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