Price prediction for maize

12 September 2008

Price prediction for maize

Federated Farmers Grain & Seed vice-chairman, Hew Dalrymple says maize growers are indicating that they need $520 a tonne for maize grain this year to remain viable.

He said that the drought and now water logging of pastures has resulted in an increased demand for stock feed.

"Buyers need to be aware that demand is greater than supply when deciding when to buy and where to source maize, especially as the New Zealand dollar is in free fall and it will cost more to import product." he said.

Colin Mackinnon, chairman of the maize growers committee of Federated Farmers Grain & Seed agrees.

"A large portion of the maize silage crop has already been sold. Prices range from 30 cents to 37 cents a kg standing. For a comparison at 32 cents a kg for a maize silage crop yield of 7.5 tonnes per acre (18.5 tonnes per hectare) gives an in the paddock price of $510 per tonne per hectare. The equivalent yield for maize grain would be 4.9 tonnes to the acre, (12.1 tonnes per hectare). The equivalent price for grain is $510 tonne in the paddock," Mr Mackinnon said.

"We are pleased to see that offers from merchants are up on last year, but these increases have been immediately eroded by increased input costs, with fertiliser, fuel and chemical prices of at least $90 more per tonne of harvested grain than last year.

"New Zealand maize is a good quality, locally grown product. But if growers don't get the prices to remain viable New Zealand will see an increase in growers exiting the industry.

"Growers are not seeking to rip off dairy farmers as has been reported. So they have a security of feed supply growers suggest that dairy farmers sign up early this year to keep costs down as last season demand and prices escalated towards the end of the season," Mr Mackinnon said.

Maize prices globally have also increased. On the Chicago Board of Trade (CBOT) corn prices have increased by 50 percent from this time last year. In New Zealand that sort of increase would equate to a payment of approximately $520/t.

"Due to other opportunities including alternative crops, dairying and grazing, the amount grown will decrease further if millers don't pay a decent price for maize," he said.

Mr Mackinnon said to import equivalent feed from Australian it would cost approximately $510 tonne for wheat.

ENDS

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