Price of cereal grain buoyant
A limited carry-over of feed grain from last harvest is keeping up domestic demand and prices, despite falling grain prices overseas.
While planting of milling wheat is expected to be at a similar level to last harvest's, the predicted area of feed barley for the 2015 harvest is up about 18 per cent, according to the latest arable industry marketing initiative (AIMI) grower survey.
This is despite areas of milling and feed wheat, and malting and feed barley crops planted in autumn being down by 17 to 21 per cent due to exceptionally wet weather during March and April in the main cropping areas, leaving many farmers unable to get machinery onto paddocks.
Federated Farmers grain and seed chairman Ian Mackenzie said that in some districts it was still too wet to sow wheat. However, the survey showed farmers still intended to sow cereals, with spring-sown feed barley expected to become the most likely option as the season progressed. The later cereal crops were sown, the more this would impact on yields.
Uncontracted feed wheat and barley was selling for up to $440 to $450 a tonne, delivered, with demand strengthened by the expectation some lines of grain could sell out before next harvest.
A carry-over of grain as a result of high volumes of feed grain produced in the bumper 2012 and 2013 harvests is now gone, with tonnages back to more normal levels, the survey showed. For feed wheat, an estimated 44,000 tonnes was unsold on July 1, 2014, compared with 100,000t at the same time in 2013 and 128,000t in 2012. Feed barley also has 44,000t unsold, compared with 68,000t in 2013 and 113,000t in 2012.
As AIMI was a survey of grower intentions, some may later opt not to plant feed grain, depending on pricing or if weather conditions were unfavourable, or possibly plant alternative crops such as peas, Mackenzie said.
While the drop in Fonterra's forecast payout to $6kg of milksolids may lead some dairy farmers to reduce their spending on bought-in supplementary feed, "not everyone will react the same way", he said.
Data from the 127 survey farms showed the average yield of milling wheat for the 2014 harvest (8.7t/ha) was slightly down on the 2013 yield of 9.4t/ha, while for feed barley yields were 7.6t/ha in 2014 compared with 7.5t/ha the previous harvest.
Globally, prices for key crops such as wheat, corn and soybean are tumbling following good growing seasons and predicted bumper harvests in the United States and Europe.