Wednesday, September 19, 2018

Brexit: Should I sell grain now or not?

February 1, 2018 by  
Filed under Crops

Which way will grain markets move post-Brexit? Jeremy Cole gets out his crystal ball.

UK wheat prices for the coming harvest and next are currently in the region of £136/t for May 2018, £135/t for November 2018, 138/t for November 2019 and £142/t for May 2020.

Depending on your view of these prices, you will be a seller or not. As most farmers are not selling at present for harvest 2018 or 2019, it is a fair assumption that the price is perceived as being too low and unprofitable against any budgetary measures.

Or is there something more fundamental at play? Could it be that farmers are so uncertain about the future post-Brexit that they are stunned into inactivity on the basis that any decision to sell is a complete punt in the dark?

I feel it is the latter. After all, what Brave New World is UK agriculture entering into? Depending on the trade policy implemented after Brexit, international trade flows will have important implications on UK commodity prices and production – and in turn future agricultural policy.

Alternative analysis

This article draws heavily on a broader analysis of the UK agri sector by the Agri-Food and Biosciences Institute. Brexit will have important implications on UK agricultural commodity markets due to potentially significant changes to trade flows, it says.

Their paper tries to isolate the impacts of these changes on three alternative Brexit scenarios against a baseline scenario in which the UK stays in the Single Market.

Dr Jeremy Cole, BSc Agr Econ (Reading), runs Agricole – an independent grain brokering and marketing service for farmers. For aweekly grain market report, call 01954 719452 or visit www.agricole.co.uk

 

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