Domestic price of coarse grains

IBISWorld forecasts the domestic price of coarse grains to fall by 2.6% in 2023-24, to 97.4 index points. The majority of New Zealand's grain is either exported or sold to animal feed manufacturers. Global supply disruptions are expected to ease over the year, which is likely to reduce the inflated prices for coarse grains on the global market. Tumbling demand from dairy and beef cattle farming is likely to further erode prices.

The domestic price of coarse grains is heavily influenced by the global market. As global demand has risen in the wake of the COVID-19 pandemic, significant disruptions in global supplies caused by supply chain issues and the Russia-Ukraine conflict have contributed to a sharp increase global price for coarse grains over the three years through 2022-23. However, record harvests in Australia over the three years through 2021-22 have limited these price increases over the period. In 2017-18, harvest levels in New Zealand declined due to high rainfall levels at the beginning of the planting season and extreme heat that summer. This trend, combined with declining harvests across drought-affected eastern Australia, contributed to prices rising in 2018-19. For this reason, prices on the global market for coarse grains have risen over the past five years.

Local demand is driven largely by the agricultural sector, with a large proportion of sales directed to animal feed manufacturers. Climbing demand for New Zealand beef products in both local and export markets has lifted demand from beef cattle farming. However, dwindling demand from dairy cattle farming over the past five years have weighed on grain prices. Moreover, demand for locally grown barley has strengthened due to the growing popularity of craft beer in New Zealand and Australia. These trends have further contributed to increasing grain prices over the period. Overall, IBISWorld expects the domestic price of coarse grains to increase at a compound annual rate of 4.3% over the five years through 2023-24.