Agri Market Outlook: Summer 2022

David Eudall, AHDB Economics and Analysis Director 

Whilst a lot of people look towards taking a break at this point in the year, for those working in agriculture and food markets, the opposite is happening.

Harvests are rapidly moving along amid early developing crops and a prolonged period of dry weather. Harvesting at 4am to preserve moisture is the norm for some crops and so the impact of dry grain is both a bonus at a time when drying costs are so high, but also a risk as quality may be impacted.

For livestock markets, the question hovers over demand, and the impact of high inflation on consumer habits and spending. We’re seeing a prolonged downtrend in lamb demand with double-digit percentage drops i so far this year. Other red meat sectors are also likely to see a drop in demand, albeit at more modest levels as consumers protect their incomes and reduce spend.

For dairy, the risk of a high-cost winter is looming ever larger. Forage availability and quality may be harmed from the dry summer, and so increases in feed costs at a time when demand is uncertain poses a significant threat.

Ultimately, it feels like we’re approaching a tipping point. Squeezed margins, high inflation and significantly lower direct payments. Planning, budgeting and monitoring will be the order of the day for the next 12 months, so knowing what is on the horizon, and what to prepare for is as important as ever.

Agri-market outlook podcast - livestock

Listen to our experts discuss the key factors likely to impact your farm business this winter.

This version covers an outlook on the UK economy, consumer demand, and the beef, sheep, pork and dairy sectors.

It should be noted that the information in these outlook reports is based on information currently available but still involves risks, variables and uncertainties. Agricultural markets are highly volatile, often unpredictable, and unforeseen factors can have a major impact on production and prices. Consequently, no guarantee is given to the accuracy of the outlooks, but they are simply put forward as our best estimates at the time of publication.