Farm inputs at a glance

January 2021

These figures show key changes in spending on-farm, looking at costs such as feed, fertiliser and fuel. For a visual representation, browse the infographics gallery at the bottom of the page.

Key farm inputs explained

Fuel

With the average price of crude oil for 2020 at $41.47/barrel this was a decrease of over 35% compared to 2019. While there has been some volatility over the intervening years we have seen a significant decrease (62%) since the highs of 2012 when the annual average hit $109.45/barrel.

Forecasts for 2021 vary, but generally are in the range from $44/barrel (World Bank) to $65 (Goldman Sachs), although most forecasts seem to agree that there will be some appreciation in crude oil prices.

Of course, due to VAT, duty and the cost of refining and delivery, the percentage decreases observed in crude oil prices were not reflected fully in the prices for red diesel and pump diesel. At 52.42ppl the 2020 annual average for red diesel was a 16.5% decrease compared to 2019 and a 26.5% decrease on the annual price of 71.38ppl in 2012.

For pump diesel, the annual average for 2020 at 119.08ppl was a 9.4% decrease compared to 2019 and 16% decrease compared to the high of 2012.

We cannot ignore the ongoing pandemic impact on global oil markets, with continuing over supply and lower demand impacting trade and resulting in record low prices across the world. As we enter 2021, markets are starting to rebound. However recovery will depend on when major restrictions are lifted to support demand and this is not predicted to be the case until Q3 2021, once vaccination programs around the world are well on the way to being delivered.

Supply and demand will also be affected by political situations and impacts on production around the world with the change of US president, relationships with China, decisions by OPEC countries, Libyan tensions, and demand for jet fuel all potentially affecting the oil market.

ICIS (Independent Commodity Intelligence Services) highlights that oil demand will continue to fall in the years ahead as technology continues to advance and the price of batteries decreases, increasing the uptake of electric vehicles. The latest BloombergNEF predictions are that 2023 will be the tipping point when battery prices are low enough to start driving the mass adoption of electric vehicles. Adoption of electric vehicles will also be impacted by incentive schemes in different countries.

The number of electric vehicle options may be currently outnumbered by the many more internal combustion engine (ICE) models, but this may change in the future. ICE vehicles are likely to be banned from town and city centres, together with possible increasing carbon taxes. Manufacturers also deciding to concentrate on, and invest in, particular technologies, will further drive the move to the development of a wider range of electric vehicles.

Latest fuel prices

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Power

The impact of coronavirus lockdowns had a significant downward impact on electricity demand in many countries. In Europe, during April 2020, many countries (including Britain) saw demand slump between 10 and 16% compared to the previous year until levelling out as restricted movements continued. As demand fell so did prices.

While the coronavirus outbreak impacted demand, an unintended consequence is likely to be that a number of EU countries will hit their renewable energy targets for 2020. However, this may also dampen any investment enthusiasm in renewable technology unless tariffs are guaranteed.

Natural gas demand has been weak, with Chinese industrial demand down almost 25% last March. In many countries, demand was also down due to mild spring weather.

According to ICIS, European gas markets slumped at the end of May resulting in June and Q3 gas contracts collapsing. This was due to market fears of continued limited demand and reduced European gas storage capacity. More recently, Liquefied Natural Gas prices in Japan/Korea have spiked dramatically, to levels high enough to attract spot cargoes the world over, potentially drawing some gas away from Europe.

As industry found ways to start working again, power demand increased, but overall demand struggled to reach previous levels, even compared to previous summer months, due to weaker consumption by tourism and hospitality industries.

As holiday periods ended and businesses and schools reopened, there was a slow recovery of power demand. ICIS reported September power demand across 13 Europe countries at only 2% below the five-year average. Concerns surrounding the impact of second waves of the pandemic with further lockdowns are also likely to dampen the market.

Monitoring energy use

Explore news, guidance and resources focused on energy use on farm.

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Hay and straw

The initial wet and then very dry weather in 2020 led to concerns for grass production, but the rest of the season resulted in variable grass availability and silage and hay making opportunities. The mild autumn and early winter temperatures saw a number of farms delay housing with prolonged grass availability. However, wetter weather has led to saturated land and localised flooding at the start of 2021.

The milder spring in 2020 led to early turnout and hay prices, at £53/t, 48.5% lower compared to spring 2019. By September 2020, big bale hay prices, at £70/t, were 37% higher than the same month in 2019. By December 2020, big bale hay had risen to £112/t, which was 28.7% higher than December 2019.

The very wet winter of 2019/20 resulted in reduced winter wheat plantings and lower wheat straw availability at harvest 2020. Although there were higher spring barley plantings in 2020 the season did not result in greater barley straw availability. Straw availability could also be impacted by increased interest in no till, residual and straw incorporation cultivation techniques.

Due to the lower availability, significant increases in both barley and wheat straw prices were observed at harvest 2020. At £70/t in September 2020, big bale barley straw was the same price as September 2018 (a very dry season) and a 52% increase compared to the same month in 2019. By December 2020, big bale barley straw had increased further to £96/t, a 108% increase compared to December 2019.

In the case of big bale wheat straw, £66/t in September 2020 was a 65% increase compared to the same month in 2019. By December 2020 big bale wheat straw had also increased and at £93/t was 126.8% higher than in 2019.

Latest hay and straw prices

Find out the latest prices for big bale hay, big square baled barley straw and big square baled wheat straw in England and Wales. 

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UK feed ingredient prices

Feed wheat: Wheat prices have been rallying recently, following moves higher in global grain markets. UK wheat production during the 2020 harvest was notably down on the previous year, and the lowest production figure since 1981. The exceptionally low wheat production figures are due to a much smaller planted area back in 2019/20, caused by the wet autumn and winter affecting plantings. The outlook for feed wheat still remains fairly bullish with global grain markets having lots of support at the moment.

 

Feed barley: Feed barley prices have also been increasing in recent months but remain and a significant discount to feed wheat. Barley production in the UK was in excess of 8Mt for the 2020 harvest, due to a large increase in the amount of Spring plantings, after many delays to drilling during the previous Autumn. Barley exports have remained behind last year’s level, which has kept pressure on the domestic prices.

 

Soyabeans: Soyabean markets remain well supported and the outlook is currently fairly bullish. Dry weather in South America is limiting production and helping to support prices. Global oilseed production for 2020/21 is estimated to be higher year-on-year according to recent USDA supply and demand reports. The demand for soybeans in China remains strong as they continue to rebuild their domestic pig herd, which is helping to support global oilseed markets.

 

Maize: Global maize production is forecast to be up on last season, production estimates could however be impacted by the persistent dryness in South America. Global demand for ethanol is still yet to return to pre-pandemic levels. Imported any origin maize has been increasing in price since June 2020.

Latest UK feed ingredient prices

Check the weekly trends in prices for imported and domestically produced animal feed products.

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Fertiliser

Covid-19 will have impacted fertiliser producing countries around the world, but the reliance by the global agricultural industry on fertiliser products resulted in many countries declaring fertilisers and workers in the industry as essential. As a result, global fertiliser supply remained relatively resilient with temporary closures balanced by the start-up of new facilities.

While most 2020 requirements tended to have been purchased by the time Covid-19 impacted, fertiliser production and demand for the rest of the year was predicted to decline slightly and then bounce back in 2021.

In the UK, nitrogen prices in June tend to be the lowest observed price each year. There was only a £5/t difference between home-produced and imported AN in June 2017, but in the years since then the variation between home-produced and imported AN has been between £12 and £15/t for the same month.

In June 2020 imported AN, at £185/t, was only 2% higher than June 2017, although a decrease of £60/t (24%) compared to June 2019. Home-produced AN, at £200/t in June 2020, was 7.5% higher than June 2017, and £58/t (22%) lower than June 2019.

A firm urea market supported AN values resulting in higher December 2020 prices for both imported and home-produced AN, with prices increasing 12% and 10% respectively.

MOP and TSP production and demand tend to be relatively stable. Prices are dictated by demand and, if lower, increased supplier competition.

In June 2020, MOP, at £254/t, was nearly 9% lower than June 2019. TSP prices in June 2020, at £257/t, were 17% lower than June 2019. Both MOP and TSP prices had declined further by December 2020, dropping between 5% and 4% respectively.

The World Bank Commodities Outlook (Oct 20), forecasts global fertiliser prices to rise in 2021, by around 3%, having fallen in 2020. Teagasc forecast prices to increase by 5% on 2020 levels.

 

Latest fertiliser information

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Carol Davis

Lead analyst: farm economics

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Farm Inputs: At A Glance

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Key Market Prices and Trends: December 2020

Gallery: Farm inputs at a glance

Click on the thumbnail images below to browse the infographics on farm inputs, which look at costs such as fuel, feed and fertiliser.

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