Spring Grain Market Outlook webinar: Questions and Answers

Thank you all those who attended the webinar on Tuesday. You can access a round up here.

Most questions were answered on the day, please see the webinar for these. Those we were not able to get to are answered below.

With the SFI profitability calculations - do they consider the other longer-term benefits relating to the actions in the standards, such as the improvements in soil organic matter contents, organic amendments, potentially reducing input costs, increases in biodiversity helping to reduce the pressures and reliance on pesticide inputs? In the longer term shouldn’t these co benefits improve the finances & build more resilience?

Our SFI profitability calculations compare the costs of undertaking the required actions with the payments Defra will be making. It is a good point that some of the actions taken will develop natural capital on farm, and this should provide longer term financial benefits to the farm business. We do acknowledge this in our report but, since we don’t have robust evidence to quantify an impact, this isn’t included in our calculations.

How does seed growing farm cope with multi-species cover crops and statutory requirements for seasons between crop species?

Careful selection of cover crop mixes is vital to ensure no cereal seed is present. If this cannot be guaranteed, then use a single species cover crop and destroy well before any rouge cereal plants and grass weed species get to flowering stage. In this situation seedbed cleanliness is a higher priority than the benefits offered by cover crops. Proceed with caution and get agronomic advice.

Do the panel think that Lime prices will increase in the near future

Lime prices remained relatively stable while fertiliser prices rocketed. But shipping costs have increased, and demand has gone up in response to the fertiliser situation. Off the back on this I wouldn’t be surprised to see lime prices increase. It’s recommended that grassland soils should be tested and limed if necessary as this will improve nutrient uptake. However, I think it will still remain a relatively cheap input.

Would you advise us to forward sell crops this year or hold out for higher prices? We understand the market is volatile, but your expert opinions would be gratefully received.

This is a very interesting question and likely prominent in many minds considering high input prices. I think this firstly depends on your appetite to risk. Selling forward needs to be something you are comfortable with and fits within your overall business approach.

Essentially it comes down to understanding and protecting your margins. If you know where your breakeven point is for your crops, and what output price will make you a profit, selling forward can be a good way to manage risk. Right now, you will have a good idea of your crop conditions for harvest 2022 and likely spent a large proportion of your production costs. Therefore, producing a budget, you may know where your breakeven point sits per tonne. This can help you understand what market price is needed for your crop to earn profit. This may become more difficult for harvest 2023, given high fertiliser prices not yet understood.

The current global and domestic supply and demand balance is tight. The domestic market is following global market movements very closely, and the market is still assessing the size of global harvest 2022 crops. The market is currently very sensitive to any news that is altering this supply and demand balance. Therefore, prices remain volatile. We are expecting some harvest pressure on prices as we start the new season. However, as we head into next season (2022/23), a fundamental tight supply and demand balance will support prices.

You can find answers to questions on the day by watching the webinar, below.

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