Agri-market outlook 2023

David Eudall, AHDB Economics and Analysis Director

It was the best of times, it was the worst of times. And for our market prices, have the best times been and gone?

2022 saw some historic highs for livestock, dairy and cereals. Wheat at £350/t? Check. Milk at 50p/litre? Check. Steer prices near 450p/kg? Yep. Lamb prices continued the strength of the past couple of years with new season prices again reaching over 300p/kg in the late spring. Pig prices recovered to over 200p/kg to partially offset high costs.

However, as we enter a new year, the position of the world has shifted. Concerns over demand as the global economy battles inflation has left us with supply levels which look ample.

What goes up, must come down. And commodity markets exemplify this motto. Milk prices are a prime example of this. After a winter of strong production, increasing as we move towards the spring flush, there is a danger of creating an oversupplied market.

Wheat prices are drifting lower as energy markets drop and the global supply chain normalises after the shock of the Ukraine conflict emerging a year ago.

In some places this is a welcome respite, as pork producers watch cost of production fall (albeit at still historically high levels).

The key question is always, what happens next? The real answer is we don’t know for certain. We can create a set of assumptions based on our best information, but there is a degree of chaos and uncertainty that will always sit in commodity, agricultural and hence food markets.

So, what to do? Firstly, not panic. This is the perpetual state of agricultural commodity markets. We’ve just seen a hyper-extreme version over recent months.

There are ways to manage this constant state of flux, and we’ve highlighted them before, but they stand the test of time through all the volatility the world can offer:

1. Minimise overhead costs
2. Set goals and budgets
3. Compare yourself with others and gather information
4. Understand the market
5. Focus on detail
6. Have a mindset for change and innovation
7. Continually improve people management
8. Specialise

Our latest set of sector outlooks aim to help you understand the markets, and get a view on how they are likely to develop so you can anticipate how your business may need to adapt.

In addition to these semi-annual market outlooks, you can keep up to date with market events for your sector by signing up to receive our weekly newsletters.