United Kingdom
December 10, 2015
2016 spring cropping gross margin estimates maintain the incentive to plant spring malting barley. Spring wheat climbs the ladder versus other spring planted crops and pulses show some of the largest drops. Flat oilseed markets compared to this time last year have preserved some of the margin for spring OSR and spring linseed, particularly helping the latter to climb compared to alternatives – though with both crops relatively niche options, the impact of this could be limited.
Introduction
This analysis uses industry standard data on yields and costs, plus forward price assessments (including estimated contract prices where applicable), to arrive at indicative gross margins for a range of spring crops in England. Current forward industry price assessments were gathered in late November 2015 for delivery in Nov-16. Indicative gross margins are just that and so hide a high degree of variation. At an individual farm level, analysis should be based on farm specific information. As such, gross margin analysis (Figure 1) can give an indication of the trends in the planted area for different spring crops that we may see this spring, which is the objective of this article.
Lower costs
When compared to the gross margin forecasts made a year ago, the majority of movements year-on-year have come from changes in output (price x yield), but generally lower variable costs for 2016 have benefitted all crops somewhat. For oilseeds, here including OSR and linseed, markets have been basically flat year-on-year, allowing the cost savings to show up as better gross margins than last year.
On the fertiliser side, estimated nitrogen (N) costs in particular are lower than at this point last year, benefitting margins for nitrogen-hungry crops such as milling wheat. Nonetheless, a roughly 15% reduction in estimated N prices amounts to only £17/ha lower N costs for group 1 spring milling wheat.
The pulses and oilseeds modelled have both benefitted from lower seed costs than last year, especially pulses. However, with pulses having the largest year-on-year output declines of all crops, this has not been reflected in improved gross margins.
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