Openfield pools yield impressive results

Openfield, the UK’s leading farmers’ co-operative, has announced the results of its Autumn 2013 crop marketing pools which produced another set of impressive returns during what was a difficult trading year for UK grains.

Members of the Autumn Pool received an average £165.56/tonne ex-farm for feed wheat while those committing Group 3 biscuit quality wheat received a small premium of about £3/tonne. Those who committed to a Weetabix contract received a further payment over the basic Group 3 premium to reflect the grower protocols required by the breakfast cereal manufacturer.

Participants who committed Group 1 and 2 milling wheat benefitted from Openfield’s reputation as a reliable supplier of quality grains receiving an average price of £181.21/t and £176.17/t respectively. This represents an average premium of £15.65/t and £10.61/t respectively over the feed wheat base price.

Growers on a Warburtons contract also received a valuable premium of almost £20/t bringing the ex-farm price to £185.37/t. With a lower protein and Hagberg requirement than standard Group 1 contracts the Warburtons agreement allows growers greater flexibility with fertiliser applications while giving confidence that growers can still achieve the required specification.

“The results demonstrate a commendable performance given the challenges encountered during the marketing period,” said Openfield director of origination, Richard Jenner.

“During the marketing period the November 2013 contract on London’s LIFFE market, against which the Autumn Pool is traded, posted a high of £200/t and a low of £138/t driven primarily by an increase in world stocks. During this time the market endured sustained downward price pressure interjected by periods of significant volatility.

“The improvement in world-ending stocks had an inevitable impact on returns, but it also helped to support a brisk export programme. With domestic needs covered exports played a major role in driving the financial returns received by members. Consequently, 73% of the wheat marketed through the pool achieved some form of premium while 99.6% of the pool was moved within time,” said Mr Jenner.

Oilseed rape marketed through the Autumn Pool experienced much of the same market pressures as wheat with good soya yields in North America and good growing conditions in South America adding downward pressure. Yet members received a respectable average of £306.90/tonne ex-farm before quality bonuses.

Pools are by their nature variable and comparing performance based on prices alone can be misleading, warns Mr Jenner.

“There are different ways of measuring pool performance and we always highlight that it is not simply a case of comparison with other pools or ‘against the market’. Achievement of premiums, transaction execution, payment protection, equitable treatment and delivery to the most appropriate markets are all factors for consideration.

“Openfield successfully moved 99.6% of grain committed to the Autumn Pool products. The remaining tonnage could not be moved as it was not made available by the producer often due to due to high moisture or was blocked in by other crops, but has since been moved,” he says.

EARLY BIRD POOL
Openfield also published the results of its Early Bird Pool for 2013. This pool executes a marketing strategy that concluded in October 2013 – the time growers had completed drilling. The pool recorded an average £164.10/t ex-farm a full 10 months before harvest giving growers the security needed to plan cash-flow expenditure that season and assess the affordability of future capital expenditure.

Similarly, the 2014 Early Bird Pool completed in its forward selling plan on 15th January 2014 and will deliver a feed wheat base price of £152/t, again providing members with certainty of financial return.

Autumn Pool Campaign Values

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