Organic Market Update 24th March 2023

The conventional market has been falling sharply in recent weeks losing £28 since the 1st March closing on £191 on Friday.  This significant fall in value has effected the organic market with buyers seeing organic values far lower than they have been.  Falls in the conventional market impact organic values as imported offers are generally based on the Paris wheat value.  The market is moving back towards more usual values and is anticipated to fall further as we get closer to new crop.

Imported milling oats were reportedly being offered at the € equivalent of about £280 delivered mill.  We have seen some buying interest in wheat at a value of about £360 ex farm which although well down on values seen earlier in the season do represent strong prices against 5 year averages and good premiums over conventional.  The barley and oat markets remain challenging with very little demand.

Some reflections on the last 12 months 

The graph below compares the quoted conventional wheat value against the organic delivered wheat value on the dates that Organic Arable traded wheat.  Unlike conventional wheat we don't trade wheat every day but this represents 47 days on which organic wheat traded with more than one trade on some days.  The graph shows that the organic market largely tracks the conventional market but what is worth noting is the premium the organic market has delivered this season.  Removing the outlier values the organic premium range for this year was from £132 - £222 per tonne which is a larger figure than would usually be expected with the average premium being £191.  A more usual range would be £90 - £120 per tonne so you can see premiums have been high this year.  I suggest this is because our over-reliance on imports increases prices when global events effect supply or importation costs.  In this case the challenges of accessing Black Sea grain and the increase in freight costs because of high insurance rates and fuel costs.

Graph comparing conventional and organic wheat prices

Do not expect to see these values maintained.  The expectation is that new crop values will trade in a range from £320 - £340 ex farm depending on who one speaks with.  This would be a premium of about £130 over the conventional market which is higher than the longer term trend and perhaps reflects continued higher costs of imports.

These values are ones that gives more confidence to the livestock sector which is helpful if it helps maintain demand which has been significantly effected by this year's record high values.