Autumn is spent piecing together cargos. We’re all looking at spreadsheets to see what we’ve got in terms of quantity and quality, and what can be blended together. We get samples from the farms at harvest, showing the quality of their grain. Then it’s about mixing and matching the good stuff and the marginal stuff, and trying to fit together a spec so that we’re delivering near enough bang on what we have sold. The export terminal we’ve got in Shoreham makes doing all this and keeping track of it a bit easier.
Our customers are a varied bunch. We sell barley into Ireland in big volumes for the pig units over there. Maltsters in Europe take our malting barley. We tend to have trade agreements with them, so we can ensure supply for them for months ahead, then the price is set daily by brokers – because of currency changes, there can be some pretty big movements. Domestically, Hovis is a big customer, but we also have the guy down the road who buys his cattle feed from us in small loads.
The market is more volatile than it used to be. Unprecedented things are happening in the world and no one really knows what they mean. When Covid hit, for examples, grain markets came down quite dramatically because restaurants shut and there was a lot less wastage. You might’ve thought people stock piling and home baking would’ve sent demand up. We’re also seeing the fallout from the African swine fever epidemic that forced China to slaughter 350m pigs a couple of years. Now they’re trying to rebuild that herd at pace and they’re buying commodities from around the world at an unprecedented rate. That means demand is really high, while on the supply side there are always particular weather issues that can hamper production and create a really tight global supply-and-demand situation. Everyone’s getting twitchy about not having enough to go around. On top of that, you have events that happen out of nowhere, like a fund deciding to sell off a position in commodities because it wants to move into equities. The involvement of funds in the market can make any movements more explosive, especially if they are reacting quickly to events with a short-term perspective.
The supply-and-demand situation is only going to get tighter. At some point the world’s going to have to reconsider how it grows its food and what it eats, because there won’t be enough to go around. There’s no simple solution. Here in the UK, for example, we’ve left the EU, which was subsidising our farmers. Those subsidies look likely to be replaced by inducements around more environmental issues. For example, it might become more lucrative for farmers to start farming less intensively or even rewilding land. If that leads to a reduction in the supply of wheat, the price of wheat will start to go up and, at some point, it will become more lucrative to go back to wheat production again, and you might be back where you started.
George Phillips is a grain trader for Bartholomews.