UK: Barley growers better to focus on margins in view of market volatility

Price volatility is the main threat to arable margins so producers should concentrate on protecting their margins rather than forecasting prices, said SAC business adviser, Julian Bell, according to Farmers Guradian, November 23.

He said low stocks for 2008 meant the world would need a good grain harvest more than ever, but the weather was likely to drive the market so volatility could be expected.

Current high forward prices would boost next year’s world supply response and plantings would increase, while demand in the biofuel and feed sectors could be threatened, he said.

Malting barley confidence was growing on the back of the resurgent whisky industry and maltsters and distillers needed to increase their Scottish supplies next season.

He also saw some changes in forward contracts for cereals, especially malting crops, with some deals guaranteeing minimum prices and allowing some flexibility in response to open market price increases.

Mr Bell said the CAP health check could see an end to set-aside and reduced intervention support. The present high grain prices would make political reforms more acceptable, but could leave the sector exposed to future price drops.

23 November, 2007