How will the impact of Brexit affect cereal prices over the next few years? Nick Banks, Business Advisory Partner examines this year’s harvest prices and looks ahead to possible threats and opportunities.
With the cereals harvest complete, work commences to establish the crops for harvest 2018 and marketing of the 2017 crop that remains in store. Challenging weather after a good start disrupted last year’s harvest, and whilst yield has held up, moisture content has necessitated drying which has eroded profit margin.
2014
2015
2016
2017
2013
16606 16444 14467 15163
11921
Thousand Tonnes
Source: 2013-2016 Defra farming statistics published Oct 2016 and Dec 2016 2017 AHDB
higher forward prices of feed wheat offers farmers comfort, especially given the uncertainty of Brexit negotiations influencing the sector over that time frame. The impact of Brexit not only threatens the level or existence of direct support through subsidy, but also the market conditions in which commodities are traded. In the absence of a trade deal with the EU, tariffs may well be imposed which will impact on the volume of grain traded on the domestic market and with non-EU countries.
The latest estimate for the UK’s 2017 wheat harvest is 15.163Mt (ahdb.org.uk) substantially higher than initial forecasts, thanks to upward revisions in both yield and planted area. This output will need to be measured against forecast demand and the balance of the import and export market, but wheat futures prices currently indicate substantially stronger prices over the next two years.
The fact that the futures market is indicating
UK (LIFFE) Feed Wheat Futures Prices
130 135 140 145 150 155 160
£ / Tonne
A G R I C U L T U R E | S C R U T T O N B L A N D | 4
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