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British farmers are rushing to sell their big harvests of wheat and barley before October to avoid the potential market chaos of a no-deal Brexit.
The UK may reap the most feed barley in four years, and wheat prospects are also improving, according to the Agriculture & Horticulture Development Board. Coupled with the risk that sales to the European Union may plummet if the UK departs without a deal, that’s spurring a surge in early-season grain sales.
About 63 000 tons of barley were sold from farmers for spot delivery in the week ended August 8, AHDB data show. That’s the largest in records to 2000, and feed wheat sales reached a three-year high.
"We’re seeing a lot of spot demand coming in," said Edd Britton, a trader at Bartholomews Agri Foods in Chichester. "Our malting barley program is way ahead of where it usually is."
The UK is one of the EU’s bigger barley growers and often exports about 15% of its harvest, mostly to brewers or pig farmers within the bloc. Early wheat and barley yields are both holding above average, AHDB data show.
That swelling supply may face hefty EU import tariffs if an agreement isn’t struck before Britain’s departure, with some grain potentially facing taxes above 90 euros ($99.86) a ton. Prime Minister Boris Johnson has said the UK will be ready to leave on October 31 with or without a deal.
The market is in "a bit of a race against time," and deals aren’t being done past October, said Jonathan Arnold, trade director at grain merchant Robin Appel in Southampton.
The UK may look further afield, such as North Africa, to offload its surplus. That’s happened before after large harvests, though the markets are more commonly supplied by French and Black Sea grain. The weak pound has made British supply more competitive and prices may fall further after Brexit, according to AHDB analyst James Webster.
Tom Bradshaw, a farmer in Essex, said this year’s spring barley crop ranks among the best he’s collected. Still, there’s uncertainty about quality in parts of the U.K. as rains soak some fields just ahead of harvest. That would normally encourage him to store grain in hopes of higher prices, but he’s not willing to take the chance this year.
"We’ve decided to sell our surplus, so it will all be gone before the end of October," Bradshaw said. "A no-deal certainly isn’t the right decision for agriculture. I just cannot understand the logic of taking us to the cliff and off the edge."
