Mark Hammond from GrainLink, part of the Wynnstay Group, gives his expert opinion on the key issues surrounding feed, grain and fertiliser prices in 2023.
Feed
Compound Feed went up in price in November 2022 and today it’s £80-£100 per tonne more than it was this time last year. This is due to the high grain prices in the summer stemming from the Ukraine War and the higher manufacturing costs following the energy crisis. The beef market is buoyant at the moment, but the lamb trade has dropped back against the price of the feed. Farmers were hit by a dry summer last year, so they didn’t make the amount of hay and silage that they usually do.
Also last year we were hit with high fertiliser prices, the corn price was high, and the dry weather, all which affected livestock farmers.
This year we have had a ‘fools’ spring, February was warm and dry whereas during March we’ve had rain, snow and wind. A lot of farmers lamb in March and so it’s hitting them hard from every angle. Scanning numbers are generally down – possibly due to the hot summer affecting the performance of the tups. The grain market is falling now, back circa £150 to peak of the market of £350 per tonne and we’re expecting the feed price to drop around May, however, this may be too late in the day for the UK’s sheep farmers.
Grain
The grain price increased due to the forecast of short supply, but the shortfall has eased due to some grain actually leaving Ukraine. Australia have had a big harvest, again putting surplus on the market. Pre-war, the Ukrainian grain would have been exported over a 12-month period, but due to ‘The Grain Corridor’, this has been vastly reduced to between 3 and 6 months, meaning they are trying to move 12 months’ worth of grain in a shorter time frame, and so flooding the market. The UK had a big harvest in 2022, so there’s a lot of wheat in this country at present and due to high costs of feed, bird flu and a down market in the pig trade, grain movement has steadied. Even if wheat went back up in price, it will be difficult to move if the demand is not there.
I see the next 6 months as being tight and I don’t feel the demand will be there in the short term. However, longer term, factors affecting supply including not knowing what has been planted in Ukraine along with a deficit in Europe and America due their hot weather last year, should hopefully result in higher prices.
Fertiliser
Fertiliser again increased in price due to the war in Ukraine and the high energy prices, with urea reaching £900 per tonne at its peak. This put unbelievable pressure on farmers. Urea is now under £500 per tonne, and demand isn’t there due to farmers having already bought at the higher prices fearing it could increase even further. We only have one fertiliser factory in this country due to CF closing Ince (due to high gas price), so all that they are making now is Nitram in Billingham, with the majority of other products having to be imported. This could affect price and supply next year. There is currently also a government consultation on the spreading of urea to reduce greenhouse gases. Therefore, farmers would only be able to spread ‘protected’ urea after 31st March and this is approximately £50 per tonne more expensive than standard urea.
