Analysis Countus Arable Farm Index
Signals on green, but who benefits?
For the third time in its history, the Countus Arable Farm Index has broken through the 150-point mark. All agricultural markets that are important for the formation of the Index contributed to this. The stock exchange listing for seed onions clearly makes the difference.
De Countus Arable Farm Index reached a level above 2 points only twice before (150 and 2006). In week 2011 of 44, it just didn't work out, when the Index came in at 2012 points. In 149,7, the peak (week 2011) was 3 points. In 160 this was even slightly higher, namely 2006 points (week 164). It is unique that the Index peaks so early in the season. The focus is usually around New Years.
16
points
Since week 28 (mid-July), the Index has been above the benchmark level of January 2004, when it was set at 100 points. During August it was significantly higher. In the first 2 weeks of August, that was still over 130 points. The Index even fell slightly, due to a decline in the potato futures market.
Seed onions make the difference
With the listing for seed onions on the Emmeloord Beurs, the Index shot up. In 1 week, almost 16 points were added. That movement is easy to explain; the old season closed at €3 per 100 kilos, while the new quotation was €18,50. Together with an increase in the potato futures market (the April contract), the Arable Farm Index continues to rise. In week 35, the level was 154,2 points.
For the 2018/2019 season, the joint agricultural fairs have created a new category. Those for grading 0% to 30% coarse onions. This has not been included in the formation of the Arable Farming Index. The price level is on average €2 below the quotation of 30% to 60% coarse onions.
Further rise?
The Countus Arable Farming Index acts as a barometer for the arable farming sector. The high market prices ensure a positive image in the chart. The question is, however, who will benefit from this. However, it seems that a stable foundation has been laid. The April contract continues to move around €30 per 100 kilos and for wheat that level is around €20 per 100 kilos. The onion listing in particular can cause fireworks; if it rises to €25, or even higher, the 160 point limit is quickly reached.
The growers have such price levels in mind in order to be able to compensate for the low yields and additional costs. The practice, however, is unruly. Trade remains calm and exports must also do their best to sell large volumes. If the current price remains stable, the Arable Farm Index will still be at a strong level. A level that has not been seen much in the past 14 years.
Niels van der Boom
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