grainmatters
Welcome to the latest issue
of Grain Matters. There are so
many influences on this volatile
grain market and our efforts to
maximise our farmers’ returns
stretch to much more than just
price prediction.
Grain storage is a highly
responsible job and it is no
wonder that most of our
competitors do not provide
this. We believe in taking
responsibility and providing a
complete service so storage
is an expanding aspect of our
business. I hope that you find
the following useful and that it
keeps you in touch with what
we are trying to achieve.
Andrew Dewing
Wheat
OLD CROP - UK feed wheat from
the 2012 harvest was the worst
quality wheat for over 20 years. The
kilo-weight has been the biggest
problem following the wet summer
and the consequential poor grain fill.
This has created a need from millers
and bakers to purchase better
quality wheat from abroad in order to
achieve the correct specification for
their end products. Feed consumers
have also had to import a number of
better quality tonnes to improve the
nutritional value of their mixes. The
volume of imports have been such
that the UK will end up with a surplus
of wheat in June/July. Please keep
this in mind if you are planning to
hold onto the last bit to make a killing
at the end of the year … we are
not running out. The biggest hope
you have of a price rise is based
on new crop growing conditions. If
the weather is unkind to production,
stocks around the world are not
sufficient to stop another major rally.
So if you can predict the weather you
will get the market right.
Please note the irony of not selling at
£208 ex farm.
NEW CROP – Production in the
UK will be a maximum of 12 million
tonnes next year which means we
will be an importer as a country
again. Our price relative to French
is a £4 premium whereas the normal
level is a £10 discount.
Our price relationship to all other
wheat suppliers is also relatively high
because of the difficulties we have
had sowing the crop. Therefore our
troubles have already been accounted for in the current forward pricing.
The biggest influence on new crop
pricing will be Russia/Ukraine on the
bearish side because they had a
good autumn and, subject to winter
Dewing Grain
Newsletter
January 2013
kill, a larger than expected planted
area. On the flip side however, the
on-going dry conditions in the
mid-west of America mean the
potential for a ‘dust-bowl’ scenario is
high and recent snow cover will not
alleviate the extreme moisture deficit
in their major wheat growing states.
Malting Barley
OLD CROP - Winter barley has no
real friends at present so values
have to be basis feed barley (£190
ex spot). Spring barley is currently
valued at around £210 ex farm for
movement Feb/March.
NEW CROP – Winter barley is
valued at £170 ex for harvest and
£180 ex for November. Spring barley
is £180 ex harvest and £190 ex
November. The larger spring barley
acreage will inevitably reduce premiums for this coming season, subject
to the sowing conditions being favourable. The malting crop is going
into a niche crop status as there are
many alternatives to grow without
the risk of rejection from maltsters.
Norfolk is in a very strong position to
realise much better returns from this
crop because farmers have the bargaining power to choose what they
grow. Harvest 2014 is an important
battleground on this issue so beware
being tied in by a spot of generosity
on 2013 crop.
FEED BARLEY – Values are
shirt-tailing feed wheat values and
the discount is currently quoted at
£16 on 2012 crop and £12 on new
crop. The increased spring barley
acreage will keep the lid on this
market.
Oilseed Rape
Pulses
NEW CROP – The severe droughts
in North and South America last year
coupled with an increase in Chinese
demand has created very tight
global soybean stocks. Soybeans
dominate the vegetable oil complex
so OSR values follow soybeans.
The world is waiting tentatively for
the South American crop in March/
April to replenish stocks.
Consequently Argentinean and
Brazilian farmers have significantly
increased plantings of soybeans
resulting in a short-term ‘fund sell
off’ with the knock-on effect onto
rapeseed values. There is not much
room for a weather problem to occur!
Drilling of winter beans is thought to
be well down on poor field
conditions whilst the spring acreage
could potentially double, although
the acreage will certainly be
restricted by the limited
availability of spring seed. Given the
lack of opportunity to drill over the
winter and the tight availability of
spring seed, it is thought that several
growers are going to use winter
varieties into the spring planting
period albeit at a much higher
seed rate. Demand/consumption
will remain firm and we believe that
despite a potentially large crop that
values will hold given the bullish
sentiment for UK wheat and to an
extent soybeans. We expect
premiums to be in excess of £20,
otherwise there is little incentive to
aim for human consumption given
the additional input costs required.
Domestic fundamentals for new crop
could be a very different story due to
poor establishment and slug/
pigeon damage threatening
significant abandonment figures with
20% of the crop considered to be ‘at
risk’. Early estimates are suggesting
a 2MMT crop creating a tight
domestic market. We could see
some aggressive harvest values
to prevent rapeseed entering into
export facilities and leaving the
country, whilst at the same time there
could be a good opportunity to
strategically store rapeseed to
market towards the tail-end of the
marketing year.
Looking at the longer term picture,
due to the recent fund liquidation
out of soybeans, taking values from
$17.80 down to $13.75, corn (at
$7.50) is winning the battle for acres
to the detriment of the soybean
acreage.
OLD CROP - The 12/13 UK crop
estimate is at 2.7MMT vs expected
consumption in the region of 2MMT
leaving a large exportable surplus.
On paper there is a surplus although
it does not feel like it with farmers
reluctant to sell and the soya
influence always in the background.
Organic
market with the news that Kazakh
origin wheat has been coming into
the country at competitive levels.
Given the lack of UK consumers of
malting barley, domestic demand
towards the tail end of the year is
likely to be sparse, although there is
consumer interest from the continent
providing an outlet for any unsold
tonnage.
Due to poor yields across the
country and the presence of
fusarium, seed availability has been
limited and surely given the short
time frame to drill winter wheat,
nationally the planted acreage must
be down, helping support new crop
values.
Unfortunately the UK demand has
fallen over recent years as the
difficult economic conditions are
having an impact on sales of organic
products, with 2011 figures reporting
a reduction of 3.7%. In turn the
number of UK producers and
processors dropped by 4%.
However, supplies are likely to
remain tight offering support for
values, with the only threat being
from cheap imported grain.
Combinable Crops Passport
Aside from the crop in Norfolk which
was generally good, harvest
results across the country were poor,
producing variable quality.
Largely malting barley came in
testing low on bushel weight with
poor retention both held and
through. The wheat yielded
poorly and as with conventional
grains struggled to produce good
kilo-weights. The consumer demand
is certainly on the side of wheat
which is evident from the fact that it
is currently worth a value at parity to
organic spring malting barley,
however a cap is held over the
ISCC certification was introduced
as a renewable energy directive to
ensure that Oilseed Rape used as
biomass has been sustainably
produced. Although it is not a
prerequisite for feed grains, we will
be registering all of our OSR and
Wheat as sustainable to ensure
that the grain covers all aspects of
consumer demand. Unlike previous
years where we required self-declarations from each farm, any crop
produced under the red-tractor
scheme is deemed to qualify as
sustainable – meaning much less
paperwork at your end! However
when filling out the ‘Combinable
Crops Passport’ please would you
fill in Section 8 – Renewable Energy
Directive.
Storage
The model that Dewing Grain uses
to successfully develop its business
within Norfolk is heavily focused
around storage. We understand that
while price is important to you,
service is of equal significance.
It doesn’t matter if you have a great
value on your wheat, if you can’t
combine it because your rape is
still sitting in the shed for example.
We are constantly developing our
portfolio of stores across the county,
looking ahead each year to
understand what your requirements
are likely to be. Our storage
management model is simple and
fair as it is based on the same model
employed by a very successful local
farming cooperative.
In 2013 we will be continuing to add
to our existing portfolio of stores.
We will be renting storage space at
the Holkham Estate, Little Plumstead
and Ellough. The map below
provides a breakdown of each of our
stores and the crops for intake.
Dewing Grain Store Locations
Holkham
Cromer
Oulton
Fakenham
Salle
Aylsham
Stalham
Great Dunham
Honingham
Dereham
Little Plumstead
Shipdham
Norwich
Saxlingham
Cantley
Watton
Attleborough
Great
Yarmouth
Stoke
Holy Cross
Ellough
One of the biggest success stories,
supporting our focus on the
importance of storage has been the
Yaregrain site at Cantley.
In the 3 years Yaregrain has been
operational we have seen a year on
year uplift in number of tonnes going
into the store. We are constantly
improving the site, as the value
of this type of store management
capability has proven itself both this
harvest and last. Storage space is
still available for purchase and the
cost is the lowest in the country at
£75 per tonne less the 30% EIS tax
relief, making it £52.50 per tonne. So
again, please contact us at the office
on 01263 731550 if you would like
more information on this.
Year End Performance
Our 2011-2012 year end audited
figures came out in October and
we wanted to take this opportunity
to let you know how we are getting
on. Traded tonnage has increased
to just under 200,000 tonnes, which
is remarkable considering the short
number of years we have been in
business. 2011-2012 has been our
first year as a limited company and
we are exceptionally happy with our
performance.
Sponsorship
We take great pride in engaging
in as much sponsorship as
possible each year, supporting a
variety of local sporting teams and
other events.
Last year we were pleased to be
able to offer sponsorship to North
Walsham Rugby Club 1st team kit,
Holt Rugby Club training kit,
St Andrews Football Club, and
Norwich Phoenix Netball.
We have also sponsored the North
Norfolk Harriers, Heydon Horse trials
and various ploughing matches. All
of our sponsorship remains focused
on putting money back into our
county.
Meet The Team
Team News
New Offices
Andrew Dewing
Chief Executive
Oliver Hitchcock will be joining us
starting 1st February. Oliver has
over 24 years’ experience in the
grain trade, the most recent of
which has been in the merchanting
side, however a large portion of his
experience comes from working as
marketing manager of Fram Farmers,
the Suffolk Cooperative. Oliver has a
wealth of experience across all
agricultural commodities and has
spent a number of years building
close relationships with the likes
of maltsters and distillers etc. We
are sure he will be a very valuable
member of the Dewing Grain team
and we look forward to having him
on board and sharing his knowledge
and experience.
Due to the rapid expansion of
Dewing Grain as a business and
the consequent growing numbers of
staff, we made the move over to the
larger building across the yard from
our previous offices in November.
Ian Webster
Director & Oilseed Rape
and Pulses Trader
Oliver Hitchcock
Senior Trader
Ivan Bishop
Malting Barley Trading Strategist
Victoria Alston
Trader
Josh Dewing
Trader
Phil Dewing
Logistics Coordinator
& Organic Trader
Ivan Bishop remains involved in
our business in terms of risk management and in particular making
strategic decisions around the
malting barley trading book. Ivan
will however be spending more time
working away from the office and will
therefore become less involved in
the day to day management of the
barley book.
Rachel Partlow
Logistics Manager
David Gilbert
Accountant
Abigale Browne
Accounts Administrator
Will Mallett
Store & Compliance Supervisor
Liz Brooks
PA
We have renovated the building to
make it more suitable for our needs
with a separate board room,
accounts room and sample room
off the main office. If you happen to
be passing and would like to have a
look, please do come in and see our
new home.
New members of the Dewing Grain
team include Josh Dewing. Josh
joined us in July of this year as a
farm buyer and will be working
alongside the trading team in grain
procurement.
Abigale Brown also joined us in
September, having moved from
Simpsons Malt where she worked
as a grain administrator and quality
control manager. Abigale has now
taken over the role of accounts
administrator managing invoicing
and payments.
Alongside his role as logistics
coordinator, Phil has been
introduced into the trading team in
order to provide additional support
for Ian Webster in looking after the
organic book, with a view to
managing this fully in the future.
Dewing Grain
Banningham Road, Aylsham, Norfolk, NR11 6LP
Tel: 01263 731550 Email: [email protected]
Website: www.dewinggrain.co.uk