It is of interest to note that international wheat futures prices have been increasing somewhat for new crop. This is in response to concerns that winter wheat in the ground may be subject to winter frost damage, but this is still more speculation than real. However, grain growers would do well to keep an eye on markets in the weeks ahead with a possible view to forward sell, as this could be just a price spike rather than a continuous trend.

While no grower can be excited about current price levels, it is important to realise that the December 2017 MATIF wheat price was almost €200/t in the spring of 2015, while the December 2019 price is currently about €181/t. Marketing must look even further down the road when the opportunity permits.

Forward selling

It is time to let go of (but not forget) the experiences of forward selling in 2012. Though quality was a huge issue for most forward contracts, this is a rare occurrence. While prices rose after contracts were agreed, the contracted price was still at €190/t, or above, for dry wheat at the time. In that year, any income loss was still based on a profitable price. Since then most years provided a profitable opportunity to sell forward, relative to harvest price, but growers did not act following 2012.

There is no absolute certainty about forward selling, except that getting a price that is above the run of play will always make sense into the future. Forward selling is much more challenging when prices are at a low base, but in this scenario every spike can help your average price. If you don’t watch the markets you won’t know this. Producers must be proactive about selling. Deciding not to sell forward based on information is a decision. Ignoring the options available is gambling.

Decisions for 2017

With grain prices currently under pressure for 2017, serious growers must consider planting an area of crops that are in demand, such as oilseed rape, or at least not planting poor acres in grain, which cannot be profitable regardless of price.

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