Thursday, July 7, 2022

Farmers told to get grain now

Strong demand for feed over recent months is expected to put pressure on grain stocks going through to the next harvest.

The best advice from the industry following the release last week of the Arable Industry Marketing Initiative (AIMI) report was to secure feed supplies sooner rather than later.

Market analysts have called on the cereal and livestock industries to note from the arable industry report that feed stocks, in particular barley, are low.

Figures show the strong demand for feed during the drought and other events has resulted in lower stocks of unsold feed grain, despite another year of high yield in cereals.

“Based on these figures, and what I see around me, I would expect stocks of feed grain to be tight going through to next harvest,” Federated Farmers grain and seed chairman Ian Mackenzie said.

Figures show the strong demand for feed during the drought and other events has resulted in lower stocks of unsold feed grain, despite another year of high yield in cereals. 

The AIMI survey showed unsold feed barley stocks at July 1 were down 40% on last year. This was a similar amount to 2011, when feed barley became difficult to source toward the end of the year.

Unsold feed wheat stocks look healthier, although they are still at a lower level than at this time last year.

“I would encourage all grain and seed industry participants to look at these figures carefully and make full use of the tool where possible,” Mackenzie said.

“The undertaking of this survey is an industry initiative to address the knowledge gap between growers, sellers and buyers who have professional staff dedicated to monitoring the supply and demand situation.”

The NZX Agrifax AIMI survey analysis showed total sales of feed wheat and barley, when including sales of last year’s grain that was carried over, were above last year’s sales at July 1, by 17% and 31% respectively.

The available amount of feed barley in the survey was just 7500 tonnes more than in July 2011, when barley supply became tight towards the end of the year and prices reached $450 a tonne.

The volume of sold grain in storage is much higher than 2011 and last year, which indicates, though demand for spring is strong, a lot of the current sales have been to cover spring needs.

Sales between the April AIMI survey and the July survey were far higher than previous years. Including sales of carried-over grain, about 117,000t of feed barley was sold in this period, up from 67,000t last year, and 39,000t of feed wheat was sold, up from 9000t last year.

Analysis of the delivered and undelivered volumes of sold grain showed about 18% of this feed wheat would have been sold for prompt delivery, while 77% of the barley would have been sold for prompt delivery.

This suggested while most of the barley was for feeding out, a lot of the wheat would have been bought contract to cover risk in case of higher prices.

 This year the average price of feed wheat and barley has risen $33/t to the mid-$380s/t for each.

Lower feed wheat sales and much higher stocks of wheat than feed barley could provide some downside to the feed barley prices, because despite a preference for barley in dairy feeding, there is some ability to interchange with wheat.

Total stocks of feed wheat on farm, sold and unsold, on July 1 were estimated to be 251,000t, which was down a little on the same time last year at 274,000t but well up on the 100,000t in 2011.

For feed barley, stocks were estimated to be 216,000t, similar to last year at 208,000t and, like wheat, well up on the 123,000t in 2011. 

MORE: NZX Agrifax has produced a report that reviews the AIMI survey findings and looks at the implications for feed grain supply this season. This report can be downloaded free at http://www.nzxagri.com/article/64.html

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