Carter Jonas
Carter Jonas

Good harvest will keep prices suppressed

We have perhaps been pre-occupied by the plight of dairy farmers in recent months but with winter oil seed rape having largely flowered attention naturally turns to the prospects for this year’s harvest and at present they do not look particularly optimistic as prices remain subdued.

At the time of writing, the price for last year’s crop of feed wheat had dropped further and the Farmer’s Weekly average spot price stood at £107/tonne although prices varied in different regions ranging from £105-£114/tonne.

These prices are affected by the reasonably large tonnage left in store from last year’s harvest but prospects for the 2015 crop prices do not look good as all the signs point towards a good global harvest. Admittedly this could still be affected by some dramatic weather event at home or aboard - this only emphasises farming profits’ vulnerability to factors entirely outside farmers’ control.

As for oilseed rape prices, these are as subdued as wheat prices. The oilseed market is being affected by low oil prices, concerns about the Eurozone, and the general uncertainty surrounding the general election. As a result new crop rapeseed is trading at £240-£250/t ex-farm for this harvest.

These prices are down more than 40% on peak prices seen around four years ago and as a result less oilseed rape may be planted this autumn as input costs rise to control both weed and insect pests.

The prospects for arable farming look as similarly poor as other sectors of UK agriculture although unlike the milk sector, where prices vary hugely with the best contracts still offering over 30p/ litre while the worst are around 20p/litre, the price of arable produce does not vary anything like as much.

Prices in the arable sector are dictated by global markets and thus a drought or flood in one of the world’s major arable areas can have a significant impact on prices at home, leading to the rather unhealthy prospect of hoping someone else suffers a poor crop in the hope this bring a rise in global prices. The news is not so good if we are the country affected, as was the case in the wet summer of 2012.

But, in the absence of any such disasters, it’s likely that arable prices will remain subdued. It is not good news for our arable farmers but at least it should mean the price of concentrates to be fed to dairy herds next winter should be down, which will be welcome news for some.

James Stephen

James Stephen

Partner

James is a partner who heads up Carter Jonas’ South West rural operation, managing the teams in the four offices of Marlborough, Bath, Taunton and Truro.  He primarily works out of the Taun...

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