Maize grain surplus questioned
Claims of a maize grain oversupply in New Zealand are disputed by consultant Grant McDonald, citing regular imports and Cyclone Gabrielle’s impact on east coast yields as factors causing shortages, not surpluses. Prices fluctuated dramatically, peaking at $605/t due to Ukraine war effects but dropping to $350/t by March 2024 amid anticipated higher yields and reduced demand from dairy feed sectors.
H&T forage and cropping consultant Grant McDonald is questioning claims that maize grain growers faced an oversupply in the market.
An oversupply of maize grain has been cited as the main reason contract prices fell below a break-even amount.
McDonald said around 36,000 tonnes of maize grain was imported into New Zealand in the 2023-2024 season. He said this was not unusual, with large imports coming in every year. It had not created a grain surplus, he said.
Grain companies tend to import grain in November/December for logistical reasons.
By that stage, most have used up the previous season’s grain and there is space in the silos to bring it in and use it until the season’s grain that was still growing was ready for the market.
McDonald said while there would have been a reduction in demand for maize grain used in blended feeds for the dairy sector, talk of an over-supply of maize grain is incorrect.
The volume that was lost on the east coast through Cyclone Gabrielle and below-average yields in the Bay of Plenty in the 2023 harvest means there is no oversupply. If anything, there is a shortage.
“The numbers don’t add up.”
However, he does believe some companies used a story in Farmers Weekly earlier this year, when people in the grain industry warned of a “perfect storm” this autumn, as an excuse to reduce prices being offered.
In response, Wairoa Federated Farmers arable chair Allan Newton insisted he was told earlier this year that there was a grain surplus, saying: “If they didn’t have a surplus and they have screwed us over like they did with the price this year, it’s ****ing financial cruelty.”
Newton said the grain that is imported is usually of inferior quality and is used to benchmark the price paid to local growers.
Maize grain market information obtained by Farmers Weekly says New Zealand maize prices spiked from $450/t to $605/t grower price at the dryer (delivered) following the start of the war in Ukraine in April 2022.
Last year, corn imports were the lowest in the past 10 seasons, despite 2023 season yields being 5-20% below average.
Contracts for the 2024 harvest maize were offered at over $500/t delivered between July-Sept 2023.
There were still active buyers of NZ maize at around $500/t delivered until early December 23.
In January 2024, growers started to anticipate larger yields. At the same time NZ pasture growth remained strong and dairy feed blenders and millers still had full silos and sheds of maize unsold.
The reduced demand and expected increased supply saw prices drop from $450/t in mid-January to $350/t by late March as re-sellers aggressively chased end users.
Source Link: https://www.farmersweekly.co.nz/markets/maize-grain-surplus-questioned/
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