Promising signs for drive for milling wheat self-sufficiency

 20 November, 2019

A big drop in the amount of unsold cereal grain since July, and continuing strong demand for milling wheat, are key features of the latest Arable Industry Marketing Initiative (AIMI) survey.

It is estimated unsold stocks of cereal grain, summed over all six crops, reduced by 44% between 1 July and 10 October.  “That’s a good sign, even if deliveries hadn’t happened by the time of the October survey, that people have been meeting the market and getting product sold,” Federated Farmers Arable Vice-Chairperson Grains, Brian Leadley, said.

Total production from the 2019 harvest (wheat, barley and oats) was 799,900 tonnes, about 25,000t up on the 2018 harvest.

While unsold stocks across the six crops are up by 95% (or 52,700 tonnes) compared to October last year, people shouldn’t read too much into that, Brian said.

“This time last year there was very little left about. 

“When you look at it on a five to 10-year rolling average, stocks still on hand from the 2109 harvest (108,492t unsold, 227,747t sold and stored on farm) are not that massive.

“There’s a bit of concern about the feed barley market, which is a bit flat at the moment.  We’d like to see that move a bit.”

Overall, Brian described the situation as “stable.

“Prices aren’t bad but not a lot moved.  It reflects the mood in agriculture, I think.  Seed grains are being bought when it’s actually needed rather than being bought and stockpiled or bought in preparation.”

Milling wheat options have been taken up, with the mills responding well to calls from Federated Farmers and others in the industry to put out forward contracts early to send the right signals.

“It’s given some confidence to growers.”

The area sown plus intended to be sown in wheat, barley or oats, as at 10 October 2019, was estimated to be 5% down (5,300ha) on the area harvested in 2018.  Over the two year period, seed barley area was down 18%, feed wheat area was largely unchanged (down 2%) but milling wheat was up 27% and malted barley was up 16%.

“When there’s lesser demand for feed grains, the lift for milling wheat fits in well.  It also has a bigger window for planting.  For good yields of feed wheats they have to be planted early whereas with some of the milling varieties you can get them in a bit later.

“That can work with the farming rotation.  A lot of arable farmers have a livestock grazing system within their operation, and with good returns for red meat in particular, it supports that later planting possible with milling varieties.”

On the whole, the trend is promising for the drive by the Arable Food Industry Council for New Zealand to be self-sufficient in milling wheat by 2025, Brian said.