Situation and outlook for New Zealand agriculture and forestry (August 2007)
10 Arable
Wheat prices
The world wheat price indicator reached US$210 per tonne during 2006/07, its highest real price in 10 seasons. The main factors driving the price were droughts in major exporting countries, increased demand for grain for biofuel production, and a continuing low world stock.
As Australian wheat production recovers from the drought, and other producers respond to high prices, global wheat production is forecast to increase 6 percent. Therefore, prices are expected to fall back 8 percent from the highs of 2006/07 to US$193 per tonne in 2007/08.
The world price is expected be around US$200 per tonne for wheat and US$186 per tonne for maize by the end of our forecast period.
The indicator price for New Zealand wheat will rise to $350 per tonne in the year ending 31 March 2008 (see Table 10.1). At the forecast United States (US) – New Zealand dollar exchange rate, wheat prices are forecast to fall back to $330 per tonne in the year ending 31 March 2009, before rising steadily to $350 per tonne in the year ending 31 March 2011.
Table 10.1: New Zealand wheat prices
| Actual | Forecast | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| Year to 31 March | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | |
| NZ contract price, milling wheat ($/t) | 315 |
290 |
285 |
315 |
350 |
330 |
340 |
350 | |
Source MAF.
Other crops
The same factors driving wheat prices have been responsible for the world maize price rising 60 percent during 2006/07 and for grain pea prices firming over the same period.
Prices for New Zealand pasture, vegetable, and forage seeds in world markets are stable or increasing. Seed quality and the reliability of delivery are the key drivers for this market, with price of less importance.
Exports
Exports of ryegrass have been growing overall for several years now. In the year to March 2007, 17 200 tonnes were exported with a value of $33 million, up from $24 million the year before. Clover production and exports have also increased in the past two years, and now total 4000 tonnes, returning a value of $23 million.
There are many positive signs for grass seeds for animal production in the medium term. A considerable amount of research and development is going into developing ryegrasses with specific animal-nutrition and pest-resistance attributes. The New Zealand seed industry is establishing relationships with international seed companies to expand markets.
Vegetable seed exports have been the growth export category in the arable industry for the past 10 years, and now total $38 million for the year ended 31 March 2007. Only about 3000 hectares of these crops are grown in New Zealand, so they are very high export return crops on a per-hectare basis. The outlook for exports during 2007/08 is likely to be similar, but some uncertainty remains because of the late harvest and the undetermined outcome of germination and purity tests.
A large part of New Zealand’s pasture seed production is sold to New Zealand pastoral farmers. Recent production increases have been to meet domestic demand for high-quality pasture seeds and more regular pasture renewal, which improve pasture performance.
Cereal imports, mainly wheat for flour production, have been increasing steadily for many years to total 385 000 tonnes valued at $107 million during the year ended 31 March 2007. The New Zealand animal industry has also increased its demand for supplementary feeds from the arable sector.
Seed exportsA key driver of growth in vegetable seed exports is the inability of traditional vegetable seed-producing countries in Europe to maintain “clean” land. Clean land does not have isolation issues from previous crops or weeds that cross-pollinate. Asian buyers are also active in the New Zealand market, seeking high-quality seed stocks from which to grow vegetables for their domestic markets. |
Production
Cereal production in the year ended 31 March 2007 increased to about 900 000 tonnes. The increase is mainly due to a larger barley area and better overall yields. In the short term, there will be more interest in cereal production at the expense of other crops and sheep production due to the increasing world cereal price and increasing demand from New Zealand’s animal feed industry.
Further growth in the area of grains grown is likely to be modest due to constraints in profitability compared with other land uses and high start-up costs.
New Zealand is a leader in the world seed market. Given the favourable outlook for seeds, production is expected to increase steadily.
Contact for Enquiries
Manager
Monitoring and Evaluation
MAF Policy
PO Box 2526
Wellington
NEW ZEALAND
Phone: +64 4 894 0623
Fax: +64 4 894 0741
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