Increased commodity prices bring stability to British farming industry

David Hebditch, head of the rural department at Chesterton Humberts comments on the UK farming market:

The increase in commodity prices over the past six weeks is giving a measure of financial security to farmers across the UK.  The improved prices that are now available to farmers significantly strengthens their overall profit as at this time of year all input costs have already been met and therefore the enhanced value is added to the bottom line.

Wheat prices have rocketed from 115 per tonne and at the end of July they peaked at 160 per tonne with spot prices having settled at approximately 145 per tonne by mid August.  These prices, driven up by the decision not to export wheat by Russia and China due to their own severe droughts experienced this summer, is creating uncertainty over whether there will be global shortage of cereals over 2011.

Many farmers are taking the opportunity to forward sell next years crop to fix their income and establish a secure budget for the next production year. The past two years have been uncertain for the British farming industry so these improved prices are providing some welcome stability to the industry.

Were expecting prices will continue to rise into 2011 due to lack of production in some areas which have been affected by natural disasters this year. And of course while commodity prices continue to rise, so will the demand and prices for farmland, both from farmers looking to expand their current portfolios and from investors.