Grain survey finds no cause for alarm

29 July 2015

Grain survey finds no cause for alarm

The second of three annual Arable Industry Marketing Initiative (AIMI) Survey results have been released giving a snapshot of grain stock and planting intentions as at July 1st 2015, and indicating no cause for alarm in the arable Industry.

For both Milling and Feed Wheats, the Survey shows unsold stocks are equivalent to the drought affected harvest year of 2011, but less than the last three harvests and significantly less than the unsold stocks during the grain surplus years of 2012 and 2013, while stocks of sold, but undelivered milling wheat, are 23,000t less than 2014, showing quicker movement through to the mills and effects of a smaller harvest which is balanced by 28,000t more pre-sold feed wheat on farm awaiting delivery than in the past season.

However unsold stocks are 6,000t less than last year. These unsold stocks are less than half of the tonnages in 2013 and a third of the tonnes still to be sold at this time in the 2012 season.

The downturn in the dairy industry is more apparent in barley stocks figures. At 64,000t of unsold barley, this is 20,000t more than last year, but similar to previous years. The same trend is seen in a slow movement of sold grain through to the end users resulting in higher on-farm stock of contracted grain.

Changing market dynamics are seeing opportunities in the New Zealand grain market. A rapidly depreciating Kiwi Dollar and gradually firming international grain prices on the back of El Nino forecast have increased the cost of competing imported grain supplies.

This has meant that South Island grain is being competitively priced for delivery into the southern North Island rather than being held for stock feed in the South Island.

With adequate supplies of barley available in the South Island, the arable industry is well placed to be a feed solution during the next few months. However there is a note of caution for those farmers faced with having to de-stock their properties as a result of the autumn drought. With the struggling fortunes of the dairy sector, the local grain market may not absorb additional tonnages that may be grown as a cash crop option on these livestock properties. Incurring cost to grow a crop that doesn’t have a ready buyer could turn out to be a financial handbrake.

Federated Farmers Arable Industry Group Chairperson, Guy Wigley is advising growers to make sure they have a buyer lined up before they enter the barley market as a new grower.

Planting intentions of the surveyed growers suggest a business as usual approach with feed wheat areas showing a 2.3 per cent decrease, milling wheat 18 per cent up and feed barley hectares expected to be down 8 per cent.

Guy Wigley says many farmers, both feed buyers and feed growers, are feeling the effects of the current low commodity prices. But he says contracts to buy and sell, whether written or verbal, are a legal commitment.

“We encourage buyers and sellers of grain to communicate closely to confirm and organise the timeframes for the delivery of contracted grain.”

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