Dairy can help smooth maize’s wild ride
New Zealand maize growers face volatility due to fluctuating grain prices and demand, exacerbated by international events like the war in Ukraine. The Foundation for Arable Research’s Ivan Lawrie highlights the need for the dairy industry to provide early signals on maize silage requirements to stabilize planting and pricing. A surplus of maize grain, driven by decreased dairy demand and limited storage in the North Island, underscores the need for infrastructure investment. With a deficit in animal feed, NZ imports 3.5 million tonnes annually.
Two years of maize season volatility has growers calling for earlier signalling by the dairy industry to help gauge supply and demand and stabilise pricing.
Foundation for Arable Research general manager business operations Ivan Lawrie said knowing the area of maize silage required each season would assist maize growers to better plan their planting programmes.
This follows an unprecedented roller-coaster ride for prices and demand in the past two years, with the market disruption caused by the war in Ukraine in early 2022 spiking prices of grains internationally.
In New Zealand, the market highs quickly turned downwards as maize growers sought to catch the tail-end of soaring prices, just as the dairy market reduced demand for silage and international prices plummeted.
Given maize not taken up by dairy farmers for silage is taken through by growers for grain, this led to an oversupply of maize grain in the North Island, which was exacerbated by a shortage of storage facilities.
Data from the NZX Grain and Feed Insight shows maize grain values have fluctuated from October 2022, peaking at $750 a tonne in the North Island down to almost half that at $360/t in May this year.
Data from the Arable Industry Marketing Initiative (AIMI), a survey of grower intentions, sowings, harvest tonnages and sales, shows the area planted in maize has remained stable since 2019 at around 55,000 to 58,000 hectares intended for silage and 15,000 to 17,000ha for grain.
“These are survey figures of course, and the final use of the crop can vary according to the season, but on the whole that proportion did not vary too much until the 2024 season,” Lawrie said.
Tonnage figures show that production of maize silage is less variable on an annual basis than grain production, with grain yields more vulnerable to seasonal conditions.
The 2023 harvest in particular saw tonnage of both crops plummet significantly because of the extreme weather conditions, notably Cyclone Gabrielle.
AIMI figures show most of the maize grain, around 90%, is sold under contract with prices fixed well ahead of harvest.
“NZ local grain prices do not necessarily follow the international trend due to our isolation, but this only happens to a point.”
Lawrie said while the local dairy payout prices correlate more closely to all grain prices in NZ due to demand, if there is an availability of cheap imported grain this drives the price down, “especially for maize grain where the poultry industry has quite a concentrated power over the market”.
In a situation where demand for silage has decreased, the North Island especially is not well furnished with storage and drying capacity for grain, meaning that growers have little ability to “hold grain” until price opportunities improve.
“Investing in infrastructure development would help the ability to smooth out peaks and troughs in the local market at least.”
The feed market is dairy focused, with 60% to 80% of NZ’s maize grain crop sold into dairy channels.
NZ has a deficit of 3.5 million tonnes in animal feed products, which is met by imports.
Dairy accounts for about 68% of total imported feed, which is dominated by palm kernel. Poultry accounts for about 12% of total imports, but 48% of grain imports. Milling accounts for 7% of imports, but 33% of grain imports.
Source Link : https://www.farmersweekly.co.nz/markets/dairy-can-help-smooth-maizes-wild-ride/
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