FEDERATED FARMERS GRAIN & SEED CHAIRMAN IAN MORTEN

2008/09 has been a bugger of a season to be a cropping farmer. The east coast regions of both Islands have flirted with drought since early spring. Crops suffered frost, heat and hail damage as they grew and now, near harvest, they have again been damaged from hail and wind. This has been on top of some poor prices being offered locally for grains. I believe far more than expected of this year's crop has been damaged and has been turned into whole crop silage. There have been some terribly poor yield results on crops that have been harvested. So it may be that the grain that does make it into a silo could be worth more to you than is presently being offered! 

Hay and straw are in short supply, so don't undersell your straw. You will have to replace the nutrients you sell in that straw with some high priced fertilizer. Ask around, don't just take the first price you are offered. 

The world grain scene indicates a firming of grain price fundamentals and the expectation of grain price rises in the second quarter of this year. As we all know, 2007/08 was a time of dramatic price increases in the grain commodities. These rises were fuelled by several years of consumption exceeding supply, very low world grain end stocks and speculative money playing in the futures markets.  The price rises stimulated an increase in production, resulting in more grain being grown and the world finishing stocks improving by 40 million metric tonne. However, those ending stocks are still at a historically low level. Only three out of the last 25 years have resulted in lower end stocks. 

World grain production is expected to fall in 2009/10 due to lack of profitability from the lower crop prices being offered and higher production costs. This lack of profit has already had an impact, with reduced winter wheat planted in the United States, European Union, and the Black Sea region.  Weather related production problems, like the drought that has reduced Argentina's crop and the severely cold temperatures that threaten winter wheat crops in parts of the United States, Ukraine and Russia, will reduce the growing crop potential. So world wheat production is predicted to retreat substantially in 2009/10 and again fall below demand. This should create a bull market again and see returns rise. But not as spectacular as 2007/08 and this time based on sustainable supply demand principles. 

Silage contracts
There have been reports about a number of farmers walking or trying to walk away from silage contracts. It is disturbing to think that all the fine work going into drawing up these contracts and the skill that goes into growing these crops comes to naught. When the cows start to starve after a dry autumn and hard winter, or when next year's contract is to be signed, I hope all feed sellers remember - larger deposits and black lists may be needed.

Lower North Island, Hew Dalrymple

• The market is very quiet.
• Crops in the Manawatu and Rangitikei are doing well due to the timely December rains, but with the late plantings a dry January could be a problem.
• The Hawke's Bay's crops are not looking good. Wheat and Barley are 4 inches high and the crop yields are going to be very depressed.
• In the Waikato there is a shortage of feed. The crop situation is tight and more rain is needed.
• The forecast for the Central North Island and Waikato is for another dry season, which could underpin prices.

South Canterbury, Michael Tayler

• There has been some meaningful rain!! The province received 54mm in the week before Christmas with some areas reporting much more than that.
• Most crops will gain some benefit from this with predicted yields moving from below average to average.

 Southland, John Gardyne

• There have been some good rains during December.
• With the warmer weather the crops are doing well.
• Some of the crops have suffered from the cold and dry weather before December.
• The heavy land crops are doing well; the crops on marginal land aren't doing as well.
• It will depend on how January plays out.

The following anecdotal prices have been collected from our Chairmen around New Zealand. 

Please note there is a wide range of prices that straw is being sold at.

PRICING COMMENT FROM DAVID CLARK

Hands up all of you who have struggled to sell grain in the last three months, October - December 2008?
Hands up who has been told by their Merchant or End Users that New Zealand grain is only worth low $300s and you should be grateful to make a sale.

Who has been told that Australian grain can be imported into the North Island for under NZ$300?
Who has been told that South Island cropping farmers are a "greedy pack of rouges"?

We have just received from Statistics NZ a copy of the Grain Importation Statistics for the period of October to December 2008. It makes for interesting reading, see for yourself -

It is notable that NO barley or corn was imported during October - December. Do we all remember the big rumour from early December that Aussie barley was being landed in Auckland at below $300? With imported wheat at an average price of $725, why were we being persuaded to sell at below $350? Were we really greedy and unrealistic in expecting $450-$500 for wheat? The statistics now show that even at $500/t, our grain was $225/t BELOW the price of imported wheat. We were threatened with big tonnages of sorghum being imported ultra cheap; at $485/t our barley looks like good value. 

Is it more a case that we rolled over and let the buyers tickle our tummies? I think the official term is "Averaging Down". 

I invite any member wanting a copy of the statistics, to feel free to give me a call, or email, and I will send you a copy. It is over to individual farmers to assess how the above figures affect their own business, and what would be an appropriate response from them. 

I have refrained from mentioning the season's weather; no kind words can be said!
David Clark is the Mid Canterbury Grain & Seed chairman.

PROVIDED BY MALCOLM BARTHLOMAUES, CALLUM COMMODITY NEWS

Overnight Market News (Sources: Dow Jones, AgricultureOnline,)

• Wheat lifted by 9.75 USc/bu overnight, being the market leader of the grains.
• Wheat held onto the gains against falls in corn and soybeans as rains were forecast for South America.
• There were unconfirmed reports that the government in Argentina may stop issuing export licences for wheat.
•  Export inspections in the United States came in at a 14.87 mill bu, double those of last week.
•  To date export inspections are running at 71.2 percent of the USDA forecast exports, compared to 64.7 percent on average.
• Corn finished up 3.25 USc/bu. After trading higher early in the session.
• The early strength was again fuelled by the hot dry conditions in Argentina, so that when the forecasts changed to rain, prices fell away.

Wheat Futures
March futures lifted overnight, and against the small lift in currency, added another $3.35/t to
their values from yesterday. March futures in Australian dollar terms are now up $20.75/t since last Thursday. This should be underpinning current contract prices for 2008 wheat.

New season wheat futures are at their highest levels in Australian dollar terms since November 17 and then back to October 9. Taking a snapshot of Australia Day, December United States wheat futures have never been higher on that one day than what they were this year. They even beat last year by about $0.30/t.

Another statistic is that swaps have never expired at Australian dollar levels above the current swap prices either.

All this bodes well for forward price management for this season. At least it will provide a strong floor in wheat prices, with no guarantees of course that prices won't be even higher at the end of the year - there is always a chance that new records can be made at any time that the market is trading near its highs.

The Environmental Risk Assessment Authority is currently reassessing the use of the chemicals Dichlorvos (found in Divap, Nuvos, Insectigas / ArmourCrop / AphidGas, BV2 Surface Insecticide, BV2 Insecticide Bulk) and Trichlorfon (found in Trifon). 

If you use the above products and would like to answer some questions on the use of the product, please contact Carly Sluys at csluys@fedfarm.org.nz or on 0800 FARMING.

LEADERSHIP TRAINING
Help yourself become a Federated Farmers of New Zealand leader by attending one of our two leadership courses.  For more information please click here or call 0800 327 646 to speak with your local provincial president. Spaces are limited so be in quick.

EMPLOYMENT TRAINING
Learn more about retaining your best staff and be updated on the legislative changes that have occurred in the last six months. To find out when the next seminar will close please click here or call 0800 327 646. 

RURAL JOBS
Looking for a job or trying to find someone? Then make the first stop a visit to Federated Farmers website.  To advertise for employees or see what is available please click here.  

SPECIAL DISCOUNTS
Ravensdown- Ravensdown have slashed their prices on superphosphate, DAP and urea, From 30 January Ravensdown is reducing superphosphate by $111 to $429 per tonne (direct debit price); DAP by $472 to $995 per tonne (direct debit price) and urea by $165 to $695 per tonne (direct debit price). Please click here for our price list.  

More special discounts - To find out more about special discounts for members call 0800 327 646 or please click here.

SHOP ONLINE

Farmers online - You can now purchase all your Federated Farmers of New Zealand contracts, agreements, books, branded clothing and even pay your 2009 membership subscription on Federated Farmers new online shop. Read more »

Contracts and agreements - Members can purchase Federated Farmers contracts and agreements at a discounted rate. Read more » or call 0800 327 646.

Special discounts

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RECRUITMENT

Join up - Send a copy of the Arable Bulletin to a non-member. If they join up as a full member, you will both receive $50. To join call 0800 327 646.

RURAL JOBS

Job stop - Looking for a job or trying to find someone then make the first stop a visit to Federated Farmers website.  You can both advertise for employees or see what is available. Read more »

TRAINING

Essential estate planning tips - Learn how to grow and protect the farm asset in the present, and plan for the ultimate transfer of the farm business and associated assets to the next generation in the future. Federated Farmers of New Zealand and Guardian Trust are holding informative, question and answer style estate planning seminars to provide you with a valuable introduction to the topic from their experienced and knowledgeable estate planning experts. The cost to members is $40. To find out when there is one in your area or to register for a seminar in February or March call 0800 327 646 for time and locations nearest. Read more »

If you have any questions or comments about matters raised in this newsletter, please don't hesitate to contact one of the team. After all, that's what they are there for!

For more information, contact Carly Sluys at csluys@fedfarm.org.nz or on 0800 FARMING

DISCLAIMER

The information contained in this bulletin is of a general nature only. You should seek professional advice before taking any action in relation to matters dealt with in this publication.