August 19, 2009

Grain imports flooding New Zealand

New Zealand have thousands of tonnes of unsold homegrown grains, but imports continue to flood in, according to the latest figures from Statistics New Zealand.

The figures showed that 66,458 tonnes of wheat was imported at an average US$486 per tonne during the second quarter, while 34,164 tonnes of sorghum were bought at US$412 per tonne.

This meant that importers were buying grain at a good price when they did not seem prepared to buy New Zealand grain, but maybe local farmers were not prepared to sell their produce, said Federated Farers Grains chairman Ian Morten.

Currency fluctuation, market movement, and no indication of when contracts for cargoes were struck make comparisons with local bids difficult, but the data on these and other imports is discouraging, Morten said.

Feed imports have increased for the past two years, which will negatively impact New Zealand's grain growers, he said.

Many farmers have also missed out on market highs in autumn/winter 2008 and suffered the surging costs of fuel, fertiliser and other inputs, which left them with produce grown at high costs and a domestic market that is close to a historical low.

As a result, Morten said the "good year" did more harm than good.

But unless drought develops across Australia's grain growing regions in the next couple of months, the short term prospects for a market lift are not good as Australia is expecting a good harvest, according to Morten.

Cheap grain from the Black Sea to Southeast Asian markets usually supplied by Australia, and poor feedlot demand in Australia and the US have also pressurised grain prices, and demand is not expected to pick up for the time being.

During an Australian grains conference, an Indonesian buyer said Australia is the third supplier of choice behind Canada and the US, which may reduce New Zealand into a dumping ground, Morten warned.