Carbon markets, an emerging market to help farm profitability? Grain market daily

Market commentary

• UK feed wheat futures (May-23) closed yesterday at £259.10/t, down £4.90/t on Tuesday’s close. The Nov-23 contract closed at £241.00/t down £3.50/t over the same period.
• Markets continued to be pressured yesterday by the extension of the Ukraine export corridor as well as sterling strengthening slightly against the dollar.
• On Tuesday nearby Paris milling wheat futures reached a two-week high after talks of heavy export demand for nearby shipment caused a rush to cover short positions. This demand was from China and discussion of Polish or German wheat being booked for the US.
• Paris rapeseed futures (May-23) closed yesterday at €587.25/t, down €18.25/t on Tuesday’s close. Paris futures followed the downward trend in Canadian canola markets yesterday, which came down following speculators selling positions. Markets were also pressured by the drop in Brent Crude oil prices.

Carbon markets, an emerging market to help farm profitability?

Today marks the launch of an ongoing series of work that AHDB are undertaking on carbon markets. Carbon markets have increasing relevance to farmers and growers, representing an opportunity for an additional income stream. AHDB are exploring carbon markets in more detail, to ensure our levy payers, stay fully informed about this emerging area.

Within the first article of this series ‘Carbon markets - why should I care and what is their value?’, is an introduction to what carbon markets are. From changing agricultural policy, to net zero commitments, and other tangible on-farm benefits, there are many reasons why farmers should be interested in carbon markets.

In the second article, we explore the question ‘Does my carbon have a value?’ Believe it or not…yes, it does! This article discusses the tangible benefits of building carbon stocks (which form part of natural capital) and reducing greenhouse gas (GHG) emissions. These benefits include gains from improved soil health and input cost reduction. Benefits are also monetary, as carbon stocks have a market value, contributing towards meeting net zero goals. Further to that, the article explores and discusses the current and future pricing of carbon credits.

The third article, ‘Understanding the two types of carbon markets’ is an explanation and break down of carbon markets which currently comprise the compulsory market and the voluntary market. The compulsory market is government-regulated, where companies have a legal limit to their emissions but can buy or sell allowances with other companies. The voluntary market is where companies can choose to offset their emissions by buying credits generated by carbon-sequestering projects. Of these two, the voluntary market is most relevant to farmers and growers, as there is the potential opportunity to sell carbon credits.

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