Grain and seed traders are warning North Island maize grain growers to prepare for a “perfect storm” this autumn as oversupply issues, few storage options and falling prices hit the industry.
Feilding-based grain trader Bruce Gibson of Gibson Grain said it is the result of several interwoven factors.
There is a substantial amount of grain carried over from the 2023 harvest, resulting in storage issues for this season’s crop.
The low payout at the start of the season led to dairy farmers halting their spending, with many choosing home-grown feeds over grain or imported feed.
More crops were also planted last spring as farmers prepared for a drought after warnings of an El Niño summer.
Instead, many North Island farmers had one of the best summers in recent years for growing pastures and summer feed crops, resulting in high feed surpluses.
“All of the regions – Waikato, Manawatū, Taranaki etcetera – had such good grass growth, they were making grass silage that they would not have already made and that’s added to the woe as well,” Gibson said.
Maize grain growers, particularly those without contracts, should seriously consider cutting some of their crops for silage or greenfeed because of a lack of available storage and drying facilities, he said.
The oversupply issue is not exclusive to maize, with other grains also affected including bypass (processing) peas and malting barley – both of which are being sold as lower value stock feed.
The high inventory levels are also making buyers reluctant to buy this season’s grain, he said.
“With drying space and storage maxed out, there will be crops with nowhere to go.
“To add insult to injury, one of the large multinational companies imported 30,000 tonnes of maize grain from Eastern Europe in December.”
While most of that was for one client, some of it went onto the open market, he said.
Next season’s planting decisions could be seriously influenced if this excess supply is not used.
“Some people that I deal with and know could still have 2024 maize grain unsold come planting time, but they could also have 2023 maize unsold. That’s not going to encourage them to plant for the 2025 crop.”
Some of the excess has already been sent to drought-stricken farmers in Marlborough, with 10 tonnes of grain sent in mid-March to assist those farmers, he said.
The situation has prompted PGG Wrightson North Island grain manager Kevin Flaxman to send out a letter warning growers there are limited storage options.
“Storage is expected to be in high demand, with many warehouses around the country storing large volumes of other types of feed.
“Because of these factors we anticipate a surplus of maize being available in the market this season,” he said.
Flaxman said it is unlikely that PGW will purchase maize that is above the contracted quantity.
Federated Farmers arable chair David Birkett echoed Gibson and Flaxman’s assessment.
“There has been a large carry-over from last year and the problem that it causes is that silo storage – particularly in the North Island – is already partly full with last year’s grain.”
It puts a premium on space for this year’s harvest, he said.
He said many growers are already following Gibson’s advice and are cutting their crop for silage because of the lack of space.
The downside of this advice is that silage prices have fallen as much as grain prices.
Last year, maize silage was 30-35 cents per kilogram of dry matter. That has fallen to 20-25c/kg DM. Similarly, maize grain has fallen from around $600 a tonne 12 months ago to $400/t.
Growers need at least 30c/kg DM for silage and $500/t for grain to break even, he said.
“It’s not just maize grain. Wheat and barley have done a similar thing and have dropped from $650/t to the mid-$450/t. The whole grain market has corrected.”
He is also concerned for growers along the east coast, who were still recovering from the impact of Cyclone Gabrielle and were late getting crops in the ground last spring. They also did not have the option of turning it into silage because of the lack of dairy farms in that region.
“Now they’re planted, and they are looking like good crops and they’re going to struggle to find a home for them.”
Birkett said they are also in discussions with Rural Contractors NZ to see whether the grain can be bagged in large tubes for storage.
