The feed barley volume was 100,000t higher than that left unsold at the same time in 2015, while the feed wheat volume was more than three times as much as left unsold in 2015.
The quantity of feed barley that had been sold was 52% as at April 1, but the majority had been stored onfarm (69%). For feed wheat, 54% had been sold with 85% stored onfarm.
The amount of feed in stock indicates that buyers are aware there is little risk in prices rising substantially and therefore are not in a hurry to make any buying decisions.
Growers chose to plant more wheat than barley in autumn. The area planted for feed wheat has been estimated to be up 6% on last year, while the area planted for feed barley is estimated to have nearly halved from that planted last year, being down 47%.
Spring sowing intentions for maize (grain and silage) are indicated to be down because of poor demand. Some growers have not yet been willing to predict how much maize they will plant because of uncertainty over price and contracts.
The dairy sector has started to enquire about buying feed barley to use in spring. Some farmers have been taking delivery of feed now that will be stored onfarm until they require it in spring, as they take advantage of the historically low prices.
Feed barley is priced at $255/t on average. Feed wheat is priced at about $285/t but there have been few sales.
Some of the demand for feed barley has come from dairy farmers switching from palm kernel because the comparative discount on palm kernel has eroded.
Farmers aren’t fully committed to making a complete change – instead they seem to prefer using a mixture of palm kernel and feed barley.
Palm kernel prices have been trending up in recent months and are now averaging $240/t. An El Nino-driven drought in southeast Asia has had ongoing effects on supply.
Overseas suppliers are demanding higher prices as they struggle to meet demand. There is an expectation that supply will eventually pick up at least by spring by which time demand should also have improved.
Imports of palm kernel have declined significantly over the past few months. April imports were down 81% on April 2015 and May imports were down 90% on May 2015.
Imports have been solely from Indonesia, with nothing imported from Malaysia in either month.
International grain prices are fluctuating, mainly driven by weather concerns particularly in the United States. There have been expectations of a La Nina-driven drought across the US Corn Belt, which has driven both corn and wheat prices up.
However, recent estimates of production, acreage and existing stock levels suggest there will be plenty of feed available.
Condition of corn and both winter and spring wheat has been consistently better than average, and the harvest of winter wheat has progressed quickly. Along with better weather than expected, this has caused prices to plunge.
The price for the July futures contract for corn trading on the Chicago Board of Trade has fallen about US$1/bushel over the past month to about US$3.350/bushel.
International stocks, particularly of wheat are forecast to be high this year indicating international prices are likely to be depressed for some time yet.
The International Grains Council increased their estimate of new-season global wheat production by seven million tonnes to 729m tonnes (+1%) though this is still down on their estimate of last season’s wheat production of 736m tonnes.
• Amy Van Ossenbruggen is an AgriHQ analyst
