Grain Trading Update

Greetings from The Carrfields Mobile Grain Trading Desk.        

We have recently experienced a damaging weather event, and as expected, it took a few weeks before we could fully understand the extent of the damages and impacts on our industry and growers. We are working on farms across North Canterbury, and our team is out there trying to provide assistance where we can. Though this is yet another test to our resilience, in us, you can trust, and we will work our way through it together.

I am excited to be able to deliver our first grain trading correspondence via our newsletter to you. For those that do not know me, I have been in the industry for over 23 years and spent 21 years in the wool industry prior to this. My roles in the grain industry have been in operations, general management, executive and procurement of flour mills and feed mills across New Zealand. Combined with over 1 million tonnes of grain trading, I bring to the table firsthand knowledge of international and local grain trading.

Not too long ago, I decided to move back to Christchurch, driven by a desire to live closer to my children and grandchildren. I am fortunate to have travelled extensively internationally and now looking forward to getting out and about in NZ.

Having started in January, we have wasted no time in seeking out opportunities for finding homes for your grain and have successfully transacted many thousands of tonnes, reconnecting with past customers and continued supplying grain to them. Our team actively seeks opportunities across NZ for grain supply to customers and continues to grow and expand our local base.

I have specified a “mobile” grain trading desk because we are investing in having our teams “mobile and available” to improve our service abilities and further develop our customer relationships. Our intention is also to reduce our paperwork and offer faster electronic communication and paperless contracts – a work in progress.

Milling Wheat

Flour consumption is mainly population-driven. Tourism also plays a part, as we all must eat. We do not export a lot of flour-based products, although there is an opportunity here. Major NZ flour supply contracts can also affect where the product is manufactured, resulting in more or less NZ milling wheat used. There is an over-capacity of flour milling with the two relatively new mills, one each in the North and South Island.

This creates a highly competitive market that impacts margins and profitability. Combining this with a new player puts a lot of pressure and uncertainty on us as proud suppliers of locally grown milling wheat. I summarise these facts to help you better understand what is happening and hopefully help towards your decisions on varieties to grow and sell.

Last year, the premium on milling wheat contracts to feed wheat looked relatively healthy even though we always would like to get more. This year that gap has closed. I fully understand and appreciate how disappointing this is, and we have given feedback to try and get some upward movement for you. The good news is that the feed grain prices have increased. Where most of the grain is being sold, the flour mills are buying grain, and the consumers like the good news story of “manufactured using local grain.”

Feed Grain

There are contracts out for 2022, and some end-users continue to show their hands, and requirements still for 2021 grain.

Please let me know if you want any contract offers sent to you or talk to your local Carrfields representative.

Future Prospects

We have a customer that will, from time to time, go to the market to buy grain. The nature of this type of offering is that it begins and ends in a single business day, or when the volume is secured. Several thousand tonnes have been sold this way in 2021 till present. It is normally an “ex farm price,” although we may be able to negotiate a “self-cart.” If you wish to know about these, it would be better for you to drop me a line at 027 432 8027 and let me know if you want to be notified by email or text message as soon as it comes out. This will at least give you some time consideration time unless it is filled quickly. Given the short time frame, it is sometimes challenging for our team to contact you individually as they are also busy with the other demands of their jobs.

Maize

We are working hard to offer another opportunity for you to consider growing maize. This is happening in two ways; the first is expanding the market for maize sales. Second, providing the services necessary to grow the maize locally via an ex-farm price, contractor if needed, and storage and drying.

Uncommitted Grain, 2021 and 2022

We wish to keep a database of grain that you are open to receive offers on. This could increase our opportunity of negotiating a better price with higher volume parcels.

If this is of interest to you, we need your requirements for which year, variety, number of tonnes, and your preferred method of contact to get in touch and send offers to you fast.

Waiting for the peak price to sell

We have our budgets, and our customers have their budgets. I always ask myself, “Is there more upside? Or more downside in the current market?” Only time can answer that, but such is the risk we take.

Mark Derriman

Grain Trading Manager

Please feel free to contact me at any time.
Mark Derriman
Mark Derriman
Grain Trading Manager
027 432 8027
mark.derriman@carrfields.co.nz