Prices difficult to calculate ahead of a new season
Next week we will park the sprayer at the back of our shed out of the way during harvest, after spraying off the wheat. The next time we will take it out will be for our new crop in the autumn.
The barley looks good as it starts to sway. Up untill now it was tall and stiff, now it moves with every breeze. Even the smell of the crop changes. When walking through it on a warm day, it's smell is really powerful. It's like the first time you smell grass being cut in the summer. The smell of warm barley awakens emotions and a sense of excitement that harvest is nearly here. We have two row (Annisette) and six row barley (Leibniz). We have never grown six row before so we will be interested to see how the different crops compare. The grain size is bigger than we expected. We had been told it is substantially smaller than the two row but we will wait and see when we weigh it. We have our own weighbridge and every year we say that we will try and put every load over the weigh bridge before tipping it off but, it doesn't happen in reality, we just get too busy. Maybe this year will be different.
The price of wheat and barley has fluctuated very dramatically over the year but especially over the past few weeks. The price of wheat fell €15/t in one day at the end of June. Meanwhile, the price of fertiliser is rumoured to be rising. I've heard prices up to €100/t over where it was last year and our costs this year were shocking enough.
You wouldn't want to take all the talk too seriously but at the same time, I don't see too many prices coming down. We have tried to forward buy some fertiliser and forward sell some wheat. We bought some 0.7.30 at €410 last week so it will be interesting to see what way the market goes. We did the same last year with CAN when we paid €227/t. It went up straight after we bought it but gradually during the year it fell to close to where we bought it. You wonder would we be better off just getting what we need when we need it. Having said that, it does give us some security over our finances in the future.
The cost for us to grow our wheat this year was €235 an acre, and that is before we start paying loans, diesel or machinery. But what really surprised us was we spent more on barley this year than we ever did before, at €230/ac. We felt that there was extra pressure on the crop early in the year so we added an extra spray for Rhynco which adds to the cost of growing.
It's hard to believe that we start the year not knowing how much it's going to cost us to grow the crop and we end the year not knowing what we will get paid for the crop. We did decide to forward sell some of this year's crop. We have forward sold about 300t of wheat at prices from €170-187. We also forward sold 200t of this harvest's barley at €176/t. Every year we watch the price go up past what we forward sold for and fall below what we forward sold for, the trick is to be happy with the price at the end of the year. Although we are still in 2011, we have even sold some of our 2012 wheat crop for €195/t and we haven't even got this year's cut. We are also watching the price of oil because we dry our grain in a 27t Master dryer. In 2009 we spent €10,000 in one week in August on diesel. We had the combine going full swing, tractors drawing in the grain and the dryer going and all the diesel tanks emptied at the same time. It was such a wet year and we were under pressure to get the crop in. We were cutting some wheat at over 25pc moisture and it was taking us eight hours to get it down to 14pc moisture in the dryer. This is where Mother Nature can really hurt the bank balance.
The price of oil has since gone up so if we got another wet year like that it would be very expensive to dry.
To get ready for the 2012 season we have grown a small amount of Kingdom wheat to keep as seed. We will also be looking at the various trial plots to see how other varieties did in the Irish climate. They can look great on paper but when they grow in our damp climate some don't live up to the hype. Teagasc and the seed suppliers have done super research to help us farmers to decide which new varieties to grow.