New year, new message

25th January 2023

At the start of last year, we were all still dealing with COVID-19 and the huge impact it’s had across the country. This was almost forgotten when Russia invaded Ukraine at the beginning of the year. The effect this had on agricultural markets was profound, the wheat market jumped up by £40pmt immediately, and going on to peak at £361 in mid-May. This has also increased the volatility of the market, the export corridor was regularly open and shutting making for challenging markets.

Spring was relatively benign, and in many areas harvest proved to be one of the easiest known, with little or no drying.  This was a blessing with the soaring fuel and electricity costs.  The weather continued to be kind, giving an open Autumn and good winter crop establishment, and some optimism for the growing season.

Cefetra reported good financial results in 2021 and we are confident this will be continued in 2022.  The acquisition of two large Scottish grain stores, helped us to significantly increase volumes in the region (particularly of malting barley).  We have also opened a new office in Shropshire to expand our coverage in the West. We continue to focus on being a National Company with a local presence.

Looking ahead

The year ahead of us could again prove challenging. We have seen energy costs and fertiliser costs come off the highs on the back of gas demand and price dropping, and grain prices are well down.  However, these are still at levels that 12 months ago most farmers would have jumped at.  We need to recognise that we have seen record prices on the back of a true ‘black swan event’. Many of us may not see prices up at those levels again.

It is highly likely though that market volatility will remain as we continue to see swings in the Russia/Ukraine situation, inflation and recession (slowing economies), COVID especially in China and the impact their actions have globally, and the action of central banks as they try to manage inflation.

All in all, managing the marketing of grain will continue to be a challenge as the farming sector works with potentially tighter margins. There should still be good opportunities, the key will be grasping them.

Simon Wilcox

Manager, Cefetra Grain