Outlook with Andre Lietze FeedCo Ltd

What a great end to the summer months, with NIWA announcing January was the hottest month in Whakatāne since records began in 1974!

 As I write this column it’s mid-February and I’m meant to be packing my bag in readiness for being parent help at my son’s school camp.

Another four days of hot sun is forecast, ensuring it will be a great time.

February has given us just 5.5ml of rain so far, compared to 68.5ml for the same period last year. 

The average soil temperature for the month is sitting at 21.3 degrees Celsius, which is one degree higher than last year.

These continual hot sunny days have made me wonder if we’ll get a tail end drought of sorts. However, a lot can change in a couple of weeks in farming!

Feed supplies

As a stock feed supplier I’ve felt a bit like someone trying to sell ‘ice to Eskimos’ when trying to sell feed to farmers this year.

The abundance of feed is clear with record volumes of grass silage and bales made, and many farmers still have supplies of last year’s supplements.

So, feed surplus aside, there are a few things worth considering. Now is the time for farmers to take advantage of reduced pricing for feed with some great deals particularly on maize silage.

There is a difference between the likes of maize silage, an energy source, and grass, protein, and a need for the different feeds at different points in the year for your animals.

Palm Kernal Expeller on the spot market is still +$400/t, and once you add cartage, and figure it is 90 per cent Dry Matter, it works out to be about $0.50/kgDM. PKE has a place, but with low palatability the locally-grown natural feeds available are much better value.

It will be interesting to see if PKE drops back at the Fieldays in June.

If it doesn’t, we might just see renewed demand for grass silage and maize.

Dairy prices

It was gratifying to see Fonterra increase the forecast payout on the back of increases in five consecutive Global Dairy Trade events – the most recent being a 4.2 per cent lift.

The 30 cent lift to a new midpoint of $7.80/kgMS is still under where the milk price futures are currently trading.

However, dairy farmers in the Waikato and BOP must be happy with the season so far compared to what was initially forecast – a drought and low payout – and we can expect little to derail what is looking to be a reasonable year.

It seems sheep farmers are still struggling big time with little improvement on the forecast for this year.

Maize grain growers are also facing much lower prices this season as there turns out to be a large supply of grain following a good growing season.

Currently there is a significant amount yet to be contracted to be sold. And with harvest only a few weeks’ away, growers will be starting to be a little nervous.

Pasture Renewal

Farmers will now be needing to look at pasture renewal, conducting soil tests, and seeing what paddocks they will spray out to maybe plant an annual grass for silage in spring, and then to plant as maize.

It is all about making the most out of the land you have to produce the most cost-effective feed.

Turning to the housing market, I think the new Debt To Income measures the Reserve Bank is proposing to introduce are going to have a massive dampening effect on the market, which is obviously what they want.

As a property investor I was starting to get excited about the prospect of a 10 per cent lift in house prices this year but can now only think that the DTI will make it nearby impossible for a large portion of investors to be able to buy an additional house as most will be well outside of the DTI ratio required already.

Maybe this is the end to New Zealand’s most-loved form of investment?

Needing feed supplies?

We are still able to source maize silage for anyone looking for a last-minute purchase, hay is in full swing and we have plenty of straw and milking quality grass silage too.

Now is a good time to buy while the price is right and giving you a buffer if we should experience a drought.