The current volatility of global markets and commodity prices is well documented; in recent weeks, there have been price swings that have never been experienced before. While it makes for some interesting market behaviours, knowing when to react in terms of buying and selling can be a challenge, particularly when prices are changing in a matter of minutes.
The current volatility of global markets and commodity prices is well documented; in recent weeks, there have been price swings that have never been experienced before. While it makes for some interesting market behaviours, knowing when to react in terms of buying and selling can be a challenge, particularly when prices are changing in a matter of minutes.
The recent turbulence is being fueled by several factors; the main being the Russia-Ukraine conflict. With both being major wheat and barley suppliers, there are ongoing concerns about their export capabilities and the resulting impact on world supply and demand. As a result, grain prices have already hit record highs this year and the long-term picture on whether this trend is set to continue still isn't clear. If and when global circumstances do eventually change, the downside could be quite dramatic but, even so, it remains hard to estimate the true picture.
Another strong market influence currently at play is concern for China's domestic crop potential, as strict Covid-19 lockdowns in the country are preventing farmers from planting in the key producing regions. This, in addition to the ongoing burden of rising fuel and energy prices, continues to trigger some unpredictable fluctuations in the market.
What impact do global markets have on UK markets?
Global grain markets are open for 17 hours and 30 minutes each day, so other traders around the world are moving markets outside of the UK's typical trading hours. These global market movements can influence the UK markets at all hours, which can mean some of the best trading opportunities happen outside of what is considered a usual 'working' day.
Currently, market moves are exceeding £10/t as demonstrated by the red circle in the diagram below. This means thousands of pounds can be gained or lost depending on when you sell on the day, meaning the ability to trade your grain in an instant has never been so important.
Make the most of market opportunities with online grain trading and monitoring tools
At Frontier, the relationship between farm trader and farmer is invaluable when it comes to discussing grain marketing philosophy, supply chain contracts and quality grains. Our traders can liaise on all aspects of trading and they continually stay up to date with market trends in order to provide the best possible solutions.
Of course, markets don't necessarily move to the same beat as business demand and availability – particularly in times as unpredictable as these. Giving farmers greater market transparency and more flexible options for selling grain is incredibly important; if you have more control over your grain trading opportunities, you can make decisions better suited to you and your business.
Digital options such as our MyCropMarketing online grain trading tool open up market access and increase grain trading opportunities for farmers, which can be invaluable when prices are as wide-ranging as they are at the moment. Available within our MyFarm farm management platform, MyCropMarketing offers 24-hour access to sell grain at prices relevant to your farm; giving you a greater chance to hit the all important upswings in prices that can occur daily.
While this instant access can be a huge benefit during periods of significant volatility, we know that watching markets all day every day isn't feasible or possible. To help, the tool is equipped with a price alert feature that operates for both spikes and floor levels. Alerts can be customised so if you want to know when a particular price has been hit or if the market has suddenly dropped, you can be notified by text or email.
Needless to say, it's all well and good monitoring markets but if price fluctuations and the best opportunities to trade are happening during 'unsociable hours', you need flexible trading options available at a time that suits you too. In MyCropMarketing, you don't have to wait for bids from merchants or for the markets to open – instead, you can opt to sell your feed wheat, feed barley and oilseed rape to Frontier when the time is more convenient to you.
Importantly, trading through MyCropMarketing gives you the full benefits to many consumer, port and store destinations. This ensures you receive the best price for the available markets, spanning several crop years.
Supporting you with grain marketing in person and online
It's a phrase that's been used repeatedly in recent years but it is true that these really are unprecedented times. While online access to markets and trading capabilities are incredibly useful and open up valuable market opportunities for farmers, we know that seeking advice and guidance from an expert will also feel more important than ever.
If you do have questions about how best to manage your grain marketing during eventful market periods, please reach out to your local Frontier farm trader for advice. As well as offering direct support, they will also be able to guide you through the digital tools we have available – all of which are free to any Frontier customer.
You can find more information about MyFarm at this link, and further detail about MyCropMarketing here.
Andrew Hill
National Origination Manager