East Anglia: Openfield trader urges cereal growers to spread risk
EAST Anglian cereal growers need to spread their risk in marketing their grain, amid unprecedented volatility in prices, a trader from the region has warned.
Glenn Mason, head of committed grain marketing at Openfield, told farmers at an event in Halesworth, organised by accountants Lovewell Blake and the Suffolk Coastal branch of the National Farmers’ Union, that the market was currently more challenging than at any time in his 35 years in the trade.
An estimated 431billion US dollars was currently invested in commodity funds, said Mr Mason, up by more than 60 % compared with the spike in the grain market four years ago – but the future pattern was unclear given the current volatility.
The market had become victim to global macro-economics with fund managers often reacting to headlines from individual countries.
The US maize crop was the key driver of global markets, representing 40% of world production and with almost one third of this going into ethanol production. The level of wheat stocks was not an issue with three of the biggest crops in the past three years.
However, said Mr Mason, consumption of wheat was growing, particularly in China and other Asian countries adopting a more Western diet, and there was no room for any complacency.
His advice was to spread the risk in grain marketing by putting a proportion of the crop into pools, selling some forward and keeping some back to take advantage of any spike in prices.