Agricultural supplier reports trading significantly ahead of market forecast

The Llansantffraid-based group, which has sites and customers across the region, said this is thanks to a strong trading backdrop across many core activities.

A major driver is gains in its fertiliser activities, created from rising and volatile raw material prices, particularly for ammonium nitrate.

The early UK harvest is also benefitting grain trading volumes and early cereal sales have been encouraging, with the outlook for arable activities positive thanks to strong commodity prices and good planting conditions, Wynnstay said.

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

Given current inflationary pressures and uncertain macroeconomic background, Wynnstay is leaving expectations for the next financial year unchanged.

The company said: "The trading backdrop has continued to be strong across many core activities. With the benefit of good weather conditions, the 2022 UK harvest started early and is now nearly complete, giving the group much greater visibility than usual, at this stage of the year, on the likely outturn of the seasonally important fourth quarter.

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

"A major driver of the outperformance are further gains in the Glasson fertiliser activity, created from rising and volatile raw material prices. The continuing elevated prices, particularly for ammonium nitrate, have also increased trading results across all the group’s fertiliser activities.

"Recent record prices for natural gas have caused European fertiliser manufacturers to announce temporary production suspensions, and the UK’s only manufacturer of ammonium nitrate, 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 causing further upward pressure on fertiliser prices, with available urea products increasing by around 10 per cent in the last two weeks. While these market conditions will temper demand, they have also generated further stock gains for the Glasson business.

"The early UK harvest is benefitting the group’s grain trading volumes, which are significantly higher than in recent years. Early cereal seed sales in the last few weeks have been encouraging and with attractive commodity prices and continuing favourable planting conditions, the outlook for the group’s arable performance is positive.

"Demand for feed is unseasonally strong. This mainly reflects the reduced availability of forage following the hot summer, but is also supported by higher milk prices, which has encouraged demand."

Looking ahead, Wynnstay added: "Management is highly conscious of inflationary pressures, which will increase costs for the business, farmers, and the end consumer. Given the significantly uncertain macroeconomic background, the board therefore believes that it is prudent, at this stage, to leave its expectations for the next financial year unchanged."