Monday, 23 September 2019
Volatility is an overused and misunderstood word in grain markets.
David Eudall, AHDB Head of Market Specialists – Arable
Volatility is an overused and misunderstood word in grain markets. The very definition of the word, liability to change rapidly and unpredictably, implies it’s something we have to endure, with no ability to protect ourselves from this unyielding, invisible force.
When in grain markets, volatility is something we can benefit from, when managed correctly. As we enter a new phase of trading for all agricultural commodity markets, it’s time to stop putting off marketing decisions, take a proactive step to embrace opportunities the global marketplace offers and use all the tools available to manage your price risk.
This year’s Grain Market Outlook Conference aims to provide all who attend with the starting point to actively engage with market opportunities.
Firstly, my colleagues in the Market Intelligence department will join me in giving a comprehensive review of global and domestic market drivers. It’s an important to keep in touch with the ever-changing global market narrative of price movements, to help us make better decisions.
Secondly, we are excited to welcome Gary C. Martin from the North American Export Grain Association (NAEGA) to join us. Gary’s wealth of knowledge and experience in global grain markets will help us better understand how the UK can benefit from future global trading opportunities.
Finally, we aim to finish the conference by building a business strategy based on the information we have heard during the day. Because, without a map, how can we navigate towards success?
We look forward to seeing you on the day. If you can’t make it, keep an eye on ahdb.org.uk for updates and information after the conference.
A global view
With the UK arable industry facing a future without subsidy, there’s much we can learn from the North American Export Grain Association’s (NAEGA) work on sustainable, commercial solutions.
NAEGA President and CEO Gary C. Martin said: “The most important attribute of our work is providing for an amicable environment that inspires individual as well as group action – people come first! Supporting and stimulating competition, responsiveness, compliance and reliability, while making safety a priority and meeting customer needs is essential. Likewise, our strategy and tactics need to include how we understand and manage strengths within the context of global, regional, national and local influences on the market.”
According to NAEGA’s philosophies, the world needs as little trade disruption as possible, to achieve affordable and reliable global food security and improved nutrition. But how can the UK reduce any short- or medium-term trade distortion? “Any agricultural economy’s ability to respond to change, and the opportunities that result from any business environment, is closely tied to research and education. It is critical to promote and provide for communication and innovation, based on sound science and best commercial as well as official practice,” said Gary.
Gary is also president of the International Grain Trade Coalition (IGTC) and, as such, has an insight into the impact of policy decisions on the economics of the world’s food, feed and processing industries. He predicts that in the next decade we will continue to experience expanded global capacity as well as demand for grains used for food, feed, energy and other products.
“Meanwhile policy, much like weather and climate, will result in considerable volatility and opportunity for market differentiation in response to a number of diverse and often mercurial changes in policies,” he added.
“As policy weighs on the industries, I expect the current trend of emphasising national interests to eventually result in a renewed importance placed on policies that enable multilateral and regional trade. This includes trade rules and disciplines that are modified to reflect and incorporate best official as well as commercial practices.”
Trade logistics management and new technologies are also crucial, says Gary. “There’s a plethora of opportunities to innovate technology for document digitalisation and product characteristic identification. These could bring new economies and capacity to provide for quality and safety, as well as meeting evolving consumer demand.”
This article appeared in Grain Outlook, autumn/winter 2019