24 Feb 2015

Drought keeps grain prices high

9:23 am on 24 February 2015

The South Island drought has brought mixed blessings for growers in the country's main grain region, Canterbury.

The parched conditions have significantly reduced wheat and barley yields this season - by as much as half for un-irrigated barley crops.

But Federated Farmers grain and seed chair, Ian Mackenzie, said demand for stock feed, also drought-driven, will shield local arable farmers from the full impact of an international slide in grain prices.

"I think because the international grain prices have slipped quite a long way, there was an expectation grain would fall substantially in price. The reality is, and the word I'm getting from those who are trading grain at the moment is, that the price is relatively firm, at around $400 a tonne."

Mr Mackenzie said he expected prices to remain firm.

Because of the smaller harvest and because of the drought, which is increasing demand, despite the fact that people don't want to buy grain, they have to feed their animals with something."

I think the price will stay reasonably firm, around plus or minus $10 from $400 a tonne. So that's better news for arable farmers."

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