While the large North Island feed mills have been buying imported grain, huge amounts of domestic grain has found buyers in the dairy sector in the South Island.
More than one million tonnes of palm kernel was imported in the first six months of the year – well ahead of any previous year. Imports in the first half of 2014 have increased over 2013 first half imports by 37%, which was a record level. But there have also been record imports of wheat, barley, corn, and soymeal.
Global prices are trending downwards for grains, US corn is at a three-year low, and the price differential to Australian wheat is making imports from there stack up, even with the added cost of freight.
Imported grain is now favoured in the South Island for some of the feed mills, but although it can be landed cheaply, once imported grain is unloaded, processed, and delivered, straight domestic grain can often be delivered to a farmer at a lower price. The AIMI July survey showed the area intended to be planted in feed barley for 2015 harvest was up by 18% on the area harvested this year. Intended feed wheat planting area is expected to remain steady, so total feed grain production should increase in 2015.
With domestic sales to feed mills expected to be missing out to imports in a lot of cases and demand from the dairy sector trending downwards, there may be a feed grain surplus available. However, with contract prices for growers out at more than $400/t for feed wheat and barley in Canterbury, it’s unlikely that growers will sell into the spot market below this price during summer or early autumn.
Ivan Luketina is an agriculture analyst for NZX Agri.
