As we enter the second year of the Russia/Ukraine conflict, the impact being felt by the grain and energy markets has reduced in comparison with the spring of 2022, but there is still a solid residual effect which looks set to remain into next year.
High gas prices caused concern about the possibility of fertiliser shortages. However, falling prices through the winter have seen ammonium nitrate (AN) manufacturers re-start their factories while those who continued manufacturing have ramped up production. The effect of this is a significant reduction in the price of fertiliser. Farms are now being offered fertiliser at around £475 per tonne, compared with over £900 in November 2022. Unfortunately, most farmers took cover while the market was higher due to the uncertainty over supply, meaning that they missed out on the new price structures.
Crop conditions
Much like the autumn of 2021, this last autumn allowed for the sowing of winter crops into excellent seed beds with almost all winter cereal crops in the east of Scotland and north east England coming through winter in very good form.
With crop establishments being as good, if not better, than last season, there is great optimism that the 2023 harvest could see crops performing well again. It is still very early in the year and there is time for so much to happen, so farmers are still very conscious of the high input costs of fertiliser etc. While that optimism is there, it is tempered by the fact that a crop is only worth measuring once it is safely in the stores.
Markets
As previously mentioned, the residual effect of the Ukraine conflict is still being seen in the grain markets. Although the high values were seen during the autumn and early winter, which saw wheat being traded in excess of £280 ex-farm, the market is now around £230 ex-farm, so still very high.
The 2022 harvest was one of the best experienced by the current generation of farmers and traders with high levels of quality and yield to go with favourable harvesting conditions.
High demand from the malting market has soaked up a large portion of the 2022 barley harvest, but with pig and poultry industries under pressure and putting through vastly reduced numbers of stock, barley stocks are not as low as they might have been. This has driven the current season barley price down to around £200 ex-farm for March movement.
With doubts being expressed about the forthcoming Ukraine and Russian harvests, as well as slight concerns of dry conditions within Europe, the new season, harvest 2023, prices are holding steady at very similar levels to the current grain values for both wheat and barley.