East Anglia: Openfield hails results of annual grain marketing pool

FARMER-owned grain marketing business Openfield says that members who marketed their combinable crops through its annual pool have achieved industry leading returns.

“The pool has managed risk and volatility well and demonstrates that it is possible to spread risk and still outperform the market,” said Richard Jenner. Openfield’s director of grain products and origination,

A feature of the Openfield pools is credit insurance, which ensures payment is received should a buyer be declared bankrupt, and the option of advanced payments from the members’ fund means growers can draw on funds ahead of the final sale to suit cash flow needs.

“To some growers these features are vital. We have seen one mill cease trading this year owing significant sums and advanced payments mean growers can meet cash flow requirements without having to accept lower prices on the spot market,” said Mr Jenner.

The marketing campaign was characterised by changing weather patterns across the major producing regions of the world. The situation was further complicated by adequate stocks of wheat at the global level, but dangerously tight supplies of maize.

“Our position as the leading grain exporter in the UK helped to achieve these solid prices. During the marketing year we again shipped more than one million tonnes from our 12 ports around Great Britain, including three cargoes to the United States,” said Mr Jenner.

Record maize plantings in the United States of America this spring calmed markets and encouraged merchants to shift exportable surpluses ahead of what looked to be a plentiful harvest across the Northern Hemisphere.

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“But the situation changed rapidly,” said Mr Jenner. “Following much lower values throughout the autumn period it became apparent early in the New Year that the UK balance sheet was tightening given the brisk export programme and the lack of available supplies from elsewhere due to wheat’s price competitiveness against maize.

“At the end of the campaign this coincided with weather-related concerns in South America, the EU, Black Sea and the beginnings of what we now know, is a full blown drought in the US Midwest maize belt,” he added.

During this marketing period wheat prices fluctuated by nearly �70/tonne, a level of volatility that ensured a challenging time for those making the decisions.

“Impressively, 62% of the wheat marketed received a premium while the spring barley premium of �34/tonne outperformed the market by a significant margin considering premiums fell from autumn highs of �55/tonne to �15/tonne for the pool period,” said Mr Jenner.

Members who marketed feed wheat received an average of �166.48/tonne with values ranging from �165.36 to �168.40/tonne while Group 3 wheats returned �169.11/tonne. Members marketing oilseed rape received �376.04/tonne before bonuses. “In all cases these are industry leading returns,” he said

Producers marketing premium quality grain did well too, despite the high quantity available eroding premiums.

“This was a season when milling wheat premiums were virtually non-existent for long periods however, our pool paid a standard Group1 premium of �10 while the majority of our milling wheat, which is contracted for Warburtons, achieved between �15 and �20 premium,” he added.