Agricultural supplier reports trading significantly ahead of market forecast

Gareth Davies, CEO of Wynnstay

The Llansantffraid-based group, which has sites and clients across the region, said this is due to a strong business environment across many core businesses.

An important factor is the profits in its fertilizer activities, created from the increase and volatility of the prices of raw materials, in particular ammonium nitrate.

The early UK harvest is also benefiting grain trade volumes and early cereal sales have been encouraging, with positive prospects for farming activities thanks to high commodity prices and good planting conditions, Wynnstay said.

Feed demand is exceptionally strong, mainly reflecting reduced feed availability due to the hot summer and supported by higher milk prices encouraging demand, it added.

Given current inflationary pressures and the uncertain macroeconomic backdrop, Wynnstay is keeping expectations for the next fiscal year unchanged.

The company said: “The business environment has remained strong across many core activities. With the benefit of good weather conditions, the 2022 UK harvest started early and is now almost complete, giving the group a visibility much higher than usual, at this stage of the year, on the likely seasonally important fourth quarter result.

“As a result of these factors, it is now clear that the group’s trading results for the financial year will be significantly above current market forecasts.

“An important driver of the outperformance is additional earnings in Glasson’s fertilizer business, created from rising and volatile commodity prices. Continued high prices, particularly for ammonium nitrate, have also increased commercial results in all the group’s fertilizer activities.

“Recent record natural gas prices have caused European fertilizer manufacturers to announce temporary production suspensions, and the UK’s only ammonium nitrate manufacturer, CF Industries, recently announced the permanent closure of its Cheshire plant and the temporary suspension of ammonia production at its Billingham plant.

“These decisions are putting further upward pressure on fertilizer prices, with available urea products up around 10% in the last two weeks. While these market conditions will temper demand, they have also led to further gains from shares for the Glasson business.

“The early UK harvest is benefiting the group’s grain trading volumes, which are significantly higher than in recent years. Early grain seed sales in recent weeks have been encouraging and with attractive commodity prices and continued favorable planting conditions, the outlook for the crop yield group is positive.

“Feed demand is exceptionally strong. This primarily reflects lower feed availability following the hot summer, but is also supported by rising milk prices, which has encouraged demand.”

Looking ahead, Wynnstay added: “Management is well aware of inflationary pressures, which will increase costs for the business, farmers and the end consumer. Given the significantly uncertain macroeconomic backdrop, the board believes it is prudent, in this stage, leave your expectations unchanged for the next financial year”.

Leave a Comment