Field Crop Margin Outlook: Covid-19 Update
The effects of Covid-19 and recent global commodity market developments – such as oil/energy markets, trade wars, and currency movements – have an impact on European farming. Fertilizer markets are at the lowest price levels in five years, farmers’ margins are generally steady, and most crop prices follow historical trends, although warm and dry weather lowers 2020 crop yield expectations.
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The good news is that demand for most G&O has not severely suffered, according to Rabobank’s Field Crop Margin Outlook Covid-19 Update. Biofuels are the hardest hit sector. This likely prevents soaring EU rapeseed prices, as reduced biodiesel demand offsets an even smaller EU rapeseed crop than in 2019. Barley for malt will also face a 10% or more cut in global beer demand. European arable crop farmers have not been affected in terms of farm inputs availability, field operations, or even crop commodity market terms, as price and demand look stable. Instead, unusually dry weather this spring may be a more fateful factor in many regions, hurting yields. This further indicates that climate-related weather events and volatility challenge the sector to consider better farming adaptation strategies and new thinking.