Rural property and business update – 21 September
As further movement restrictions come into force, with chat about a second full lockdown growing, this week’s Rural Update looks at some of the latest Covid-19 developments affecting farmers, as well as the latest trade and commodity news.Andrew Shirley, Head of Rural Research
3 minutes to read
Commodity markets
No big moves this week in the benchmark agricultural commodities that we track, although the USDA upped its estimate for global wheat output to 770million tonnes – a 20 million hike on the year.
However, prospects for the 2021 crop are less bullish, reports trader Frontier. It says dry weather* in the UK, EU and Black Sea region could hit output. Drilling conditions in the Ukraine are said to be the worst for ten years, with much of the country in extreme drought.
Goldman Sachs, however, is predicting that oil prices will start to move back upwards as OPEC producers become more disciplined in cutting output. The bank says that there will be a daily global deficit of three million barrels by the end of the year pushing Brent Crude to almost US$50/barrel. By Q3 2021 prices could have hit US$65, it predicts.
Another spreading epidemic, this time African Swine Fever, could hit pig prices. China has slapped a ban on German pork after a wild boar recently tested positive for the disease in the country. Combined with bans by other countries this could leave 500,000 tonnes of German pig meat, looking for a new home over the course of a year potentially pushing down prices in the EU.
*It is worth noting that increasing the carbon sequestration capacity of soil by boosting levels of organic matter also aids drought tolerance. Please contact my colleague Tom Heathcote if you are interested in regenerative agriculture.
Trade update – mixed signals from US
Joe Biden is the latest heavyweight US politician to warn the UK government that anything that threatens the integrity of the Good Friday agreement will scupper the chances of a trade deal with the UK.
However, in slightly more positive news, the US has just announced that it will lift a ban on UK beef that was implemented 24 years’ ago during the BSE outbreak. The move could unlock £66 million of annual trade, it is estimated.
But, in addition to the African swine flu worries mentioned above, the National Pig Association is warning that a lack of vet testing centres at continental ports could scupper the UK’s pig breeding sector.
From the end of this year, when the Brexit transition period expires, animals entering Europe will need to be checked. At the moment though the nearest port set up to carry out the required checks is in Spain.
Covid boost 1 – court rules in favour of insurance claimants
Many businesses hit hard by Covid-19 will be relieved following a High Court ruling that orders insurers to pay out on policies that offered business interruption insurance.
Companies had been refusing to honour claims for losses due to the impact of the pandemic. The Financial Conduct Authority estimates 370,000 businesses could be affected.
Policyholders should check to see whether they are covered and take expert advice, if needed, on what they are able to claim for.
Covid boost 2 - shoots exempts from “Rule of Six”
To the relief of country sports enthusiasts and the chagrin of conservationists, the government has announced that shoot days will be exempt from the latest social-distancing requirements. The restrictions, however, will still apply to indoor entertainment during the day.
For the full details the CLA has updated its guidance document ‘COVID safe principles for game shoots in England’.
Agriculture Bill – on the final furlong
The Agricultural Bill – much maligned because of its perceived failure to protect UK farmers and consumers from “subs-standard” imports including the dreaded chlorinated chicken - has just cleared the House of Lords “Reporting” stage and will now be sent back to the Commons for final approval.
A number of small, but important, tweaks have been made, but given the government’s large majority the Lords resisted wholesale changes. I will provide a more detailed update once it has been passed into law.
If you have any comments about any of the items in this update or would like to find out how Knight Frank could help your rural business please do email me.
Main photo by Magdalena Smolnicka on Unsplash