As growers face continued lower grain prices, strategies are having to shift towards reducing losses, rather than waiting for gains. CPM investigates trackers, and the role they can play in managing grain marketing risk in today’s testing climate.
“The priority has to be managing and spreading risk, and perhaps considering taking an alternative approach to grain marketing.” RICHARD JENNER
By Janine Adamson
With much talk of a ‘double whammy’ for growers following Harvest 2025 – low grain prices plus poor yields – exacerbated further by increasing input costs, it’s understandably proving difficult to identify any current upsides, believes Openfield’s head of grain marketing, Glenn Mason.
However, given there are no certainties when it comes to marketing grain, he adds that there always remains potential for small, incremental wins along the way, it just depends on what happens globally.
“We’ve experienced a market down-trend for the majority of last year, and while we’d usually see international crop issues or failures that tighten global demand, we’ve actually seen the opposite. There’s been a recovery, notably a very large crop in Spain – Europe’s biggest importer,” explains Glenn.
THE BIGGER PICTURE
“In Europe alone, year-on-year supply is up 20M tonnes, with a potential global supply increase predicted too; it’s in a strong place. But conversely, the US maize crop might not be as great as anticipated, and USDA data has been lacking for some time now, which indicates global stocks.”
And even with bumper global harvests, Glenn points out that stocks-to-use ratio remains tight. “There’s enough to go around, but only just. It simply means with large crops from the main export countries, there’s more competition.
“Having greater choice globally adds to the negativity for the UK, although we’re seeing some major producers switching crops and moving from cereals into legumes and oilseeds, for example, which could prove a positive.”
He adds that it’s important to acknowledge the influence of factors such as Trump tariffs and the USA’s battle with China, and how they create even more uncertainty and shifts in the market.
“It seems that whatever Trump posts on social media each day, the market reacts to,” suggests Glenn. “Any level of speculation feeds the trading algorithms. Ultimately, we’ve been stuck with historically low prices, for US wheat, it’s the lowest it’s been for five years.”
UK EXPORTS
Looking forward, with a more optimistic start for the 2025/26 cereal crop season, Openfield’s member services director, Richard Jenner, says the expectation is that the UK will resume exports following a period as an importer. “But this comes with a need to be competitive, meaning low prices may continue unless an event occurs which helps domestic markets to recover.
“This means the priority has to be managing and spreading risk, and perhaps considering taking an alternative approach to grain marketing.”
One solution could be to utilise a tracker, he proposes. “As the name suggests, they track the markets for the grower, removing any emotion associated with decision-making while retaining control.”
In the case of Openfield’s trackers, they follow the London LIFFE wheat futures price or OSR ex-farm price, plotting each trading day with the average price during the tracked period then calculated.
How they works is, a grower commits a certain tonnage which is then divided by the amount of trading days calculated from the start date to the 15th day of the month prior to the nominated month, explains Richard. “For example, if a producer starts a tracker for 300t set for 100 days, we’ll market 3t/day.
“In terms of pay out, if this committed 300t fell by £1/day during the 100 days – from £200/t to £100/t – the average price would be £150t, assuming the tracker runs its full term.”
Equally, if the market rallies and prices increase, growers will also see some of that improvement, he adds. “When growers are currently selling into a low-price environment, a tracker could work for them as it keeps them in the game. Importantly, if there’s a sudden hike they can close out at that point in time to secure the desired price. It keeps control in the farmer’s hands.”
With no joining fee or exit charge, Richard suggests a tracker could prove a positive, low-risk defence strategy, particularly when grain prices are similar or below the cost of production.
“It wouldn’t be wise to put all tonnage into a tracker, but 20% would be a good place. While selling forward will always have its place, trackers remove the stress and hassle of checking the markets on a daily basis, working away in the background on behalf of growers.
“Ultimately, it’s important to be realistic when we’re in an environment where we’re no longer looking for up-sides, more taking a defensive stance to reduce losses.”
He believes many growers can’t afford for the market to drop even further, never mind hope to make a return. “It’s likely to remain break-even rather than profit-making. Inflationary increases across machinery and inputs including seed will continue, which growers can’t pass on.
“Being reliant on a global commodity market with very limited government support means farmers are completely dependent on their marketing performance,” stresses Richard.
He says in the current bleak environment, growers mostly fall into two camps. “Some desire support with their crop marketing, while others are turning a blind eye in hope of improvement. It’s a broad church, everyone is different with diverse objectives for their businesses.
“What we do know is, hoping for something better for Harvest 2026 arguably isn’t the best position to take. Having a level of protection in place would be wise.
“And, with even more wheat planted this year, if this comes to fruition, it’ll have an impact on the overall UK crop. We’re likely to have enough wheat to support the domestic market,” predicts Richard.
Glenn adds that at the moment, the incentive to sell forward isn’t there. “Many will prefer to wait and see what happens, and time is currently on their side.
“For this coming harvest, unknowns will always come along to bite – it could be as simple as a currency shift that impacts trade flows. If sterling were to collapse, for example, it’d make our exports far more attractive.
“However, there are no certainties. Remember, in a high-price year, consumers simply reduce the quantity that they buy. It’s not like selling nuts and bolts where you tailor supply to the current demand,” he comments.
He also reminds that growers will be acutely aware that current conditions in-field can soon change, thus predictions remain anecdotal. “A dry spring can soon take the yield off a crop and we can’t control the weather. We also have quality to contend with, which is an important consideration for those with milling wheat.
“I wish I could speak with greater optimism. Small wins could be around the corner, they’re just not quantifiable or predictable,” he concludes.
This article was taken from the latest issue of CPM. Read the article in full here.
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