This is a subscriber-only article
In its latest agri market outlook, AHDB has summarised current farmgate prices in autumn 2018 (see Table 1) and analysed the factors that could impact on returns made in 2019. The report authors use the latest data available to help predict production, consumption and market trends into next year. They also acknowledge and highlight the uncertainty caused by Brexit, which inevitably makes predicting the future even more difficult.
Dairy
European milk production was impacted by the hot, dry weather this summer, and concern over future milk volumes meant market prices rose higher than would have been expected. However, the UK did not see as big a dip in production as many thought. The report highlights that winter prices could struggle, as weakening commodity prices from September filter through to the farm gate. However, farmers on cost-plus contracts with retailers could see prices increase due to a rise in winter costs.
Pork
AHDB estimates there will be more Great Britain (GB) pork produced in 2019. However, stronger exports and reduced imports should help stabilise the market.
This year hot weather impacted fertility, and with increased disease in spring this had a negative impact on production. Given continued improvements in sow performance, clean pig slaughterings are expected to increase next year.
Beef
The GB breeding herd continues to contract and that trend is expected to endure into 2019. Higher numbers of slaughtered breeding stock, driven by a shortage of fodder and stronger cow prices earlier in 2018, has contributed to a smaller breeding herd. The estimate is that the breeding herd in 2019 will be 2% smaller.
However, strong numbers of calf registrations in 2017 mean supplies of prime cattle should be strong in the first half of 2019.
But numbers could be tighter later in the year as the impact of increased cow culling starts to kick in.
Lamb
Higher on-farm mortality as a result of the bad spring is likely to see the GB breeding flock fall in 2019.
However, if more typical lambing conditions prevail in 2019, sheep meat production should remain similar to this year, but behind the five-year average.
Globally, supplies available are likely to record little year-on-year change over the next 12 months.
New Zealand production is forecast to decline slightly, although Australia is forecasting some small uplift. Strong demand in China could help limit the amount of New Zealand lamb coming to the UK.
A concern across the meat industry is that volume sales of red meat (beef, lamb, pork) are down 2.3% year-on-year.
Figures from market research company Kantar Worldpanel, suggest that up to 7% of the population is now cutting down on red meat consumption for health reasons.
Cereals
AHDB has described 2018 as a variable year for the cereal sector, as drought affected parts of the country in different ways.
While production was back, it wasn’t by as much as once feared during the peak of the drought in early summer.
Wheat production was down 5% and barley 8%.
Weather concerns and demand from the livestock sector helped push price up at harvest time.
Prices have since fallen slightly as the Russian rouble eased off against the dollar, making Russian grain cheaper on the world market.
Falling value of Brazilian and Argentine currencies has also depressed prices, along with high estimates for maize yields in the southern hemisphere.
Within the UK, while the shutdown of the Vivergo industrial plant could hit wheat demand, AHDB points out that the drought of 2018 means there is an increased demand for feed grains from the livestock sector.
Oilseed rape
Production of oilseed rape is back 5% on the year to just over 2,000,000t, as yields fell by 11% on average. Growers on light soils recorded a yield of 1.5-5t/ha, although those on heavier soils achieved 3.5-5t/ha.
Increased soya bean imports to the EU from the US have limited any increase in prices so far. Supply in 2019 could be restricted due to dry planting conditions, meaning plants struggled to get established in some UK regions and soil types this autumn.
Potatoes
Extreme growing conditions in 2018 saw a wide range of yields, depending on the ability to irrigate.
According to AHDB, yields in Scotland look to have outperformed yields in England.
Figures from Kantar Worldpanel indicate that fresh potato consumption is showing some signs of recovery, and is up 2.2% over the last five years.
Consumption in 2019 is estimated to be stable despite competition from rice, noodles and pasta.
SHARING OPTIONS: