“The much-heralded El Nino effect has not, at the time of writing, appeared to cause any major problems in the main global growing regions. There seems to be a good chance that the 2016 harvest will see production once again outstrip consumption,” Andersons said.
Successive bumper harvests have accumulated large stocks, with UK wheat and barley stocks at their highest or second-highest levels in 20 years.
“Overall, with so much grain available, the prospects for significant price improvements look limited,” Andersons commented. “Indeed, it may now require two successive lower global harvests to shrink stocks enough to boost prices. The current price range could continue through to harvest 2017.”
Andersons uses its own Loam Farm model to analyse tillage profitability. The 600ha farm operates a simple rotation of milling wheat, oilseed rape, feed wheat and spring beans.
The farm had high yields and output in 2014 and 2015 and is expected to revert to average yields this year. Overheads are stable, but the cost of renting land has gone up. There have been some variable costs savings and more are forecast for 2017, largely due to cheaper fertiliser.
With all these factors taken into account, “the business makes a loss in 2016 even after support payments are accounted for (for the first time since 2000),” Andersons concluded. “A slight improvement in prices is forecast for 2017, but profitability remains poor.”
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Thursday grain market update: grains continue to extend bullish run
“The much-heralded El Nino effect has not, at the time of writing, appeared to cause any major problems in the main global growing regions. There seems to be a good chance that the 2016 harvest will see production once again outstrip consumption,” Andersons said.
Successive bumper harvests have accumulated large stocks, with UK wheat and barley stocks at their highest or second-highest levels in 20 years.
“Overall, with so much grain available, the prospects for significant price improvements look limited,” Andersons commented. “Indeed, it may now require two successive lower global harvests to shrink stocks enough to boost prices. The current price range could continue through to harvest 2017.”
Andersons uses its own Loam Farm model to analyse tillage profitability. The 600ha farm operates a simple rotation of milling wheat, oilseed rape, feed wheat and spring beans.
The farm had high yields and output in 2014 and 2015 and is expected to revert to average yields this year. Overheads are stable, but the cost of renting land has gone up. There have been some variable costs savings and more are forecast for 2017, largely due to cheaper fertiliser.
With all these factors taken into account, “the business makes a loss in 2016 even after support payments are accounted for (for the first time since 2000),” Andersons concluded. “A slight improvement in prices is forecast for 2017, but profitability remains poor.”
Read more
Thursday grain market update: grains continue to extend bullish run
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