January 27, 2011

 

Optimistic outlook for UK grain compared to milk

 

 

UK crop growers are geared up for continuous "firm" grain prices, but dairy farmers may hope for is "stability" at best, according to Wynnstay Group.

 

Wynnstay also unveiled record results which helped its shares hit an all-time high.

 

The farm supplies group said it was upbeat overall for UK agriculture, which it said would be boosted by a political commitment to national food security besides the need to help feed an expanding world population.

 

The strong demand for food "suggests that prices for raw materials such as grain, whilst still likely to fluctuate, will remain firm", Ken Greetham, the Wynnstay chief executive, said.

 

"This bodes well for arable farmers and our arable business."

 

However in dairy, where "milk prices are currently disappointing and challenging the perseverance of some farmers", Greetham saw rising consumption bringing merely "stability".

 

Indeed, Wynnstay highlighted its strategy, in animal feed, of spreading business across dairy beef, poultry and sheep markets, so limiting "exposure to any one element of livestock farming".

 

The comments came as First Milk, the Scottish-based co-operative, revealed an increase of 0.25 pence per litre in payments to farmers, although the upgrade reflected better returns from cheese rather than liquid milk.

 

"We are particularly disappointed that returns from the liquid market have been static," Bill Mustoe, the First Milk chairman, said, adding that it was in pricing negotiations with buyers.

 

In the latest globalDairyTrade auction held by Fonterra, the New Zealand-based giant, last week, the benchmark price index rose to its highest since May last year.

 

Wynnstay's core agricultural supplies division, which includes arable and livestock operations, saw revenues jump by 10.8% to GBP178 million (US$283.25 million) for the year to the end of October, boosted by a better farming outlook and the purchase of seeds group Woodheads.

 

The retail division achieved a 21% jump to GPB65.5 million (US$104.23 million), also helped by an acquisition, of the remaining stake in the Youngs feed selling business.

 

Group earnings rose 10.8% to GBP4.23 million (US$6.73 million), on revenues up 13.3% at GBP243.7 million (US$387.83).

 

The results were "very encouraging", Greetham said, adding that the current financial year "should be one of continuing progress".

 

Wynnstay shares hit a record GBP3.34 (US$5.32) in London before easing to close down 0.9% at GBP3.22 (US$5.13). Nonetheless, the stock has risen more than 80% in the past year.