UWG Directors Meeting Summary

Tuesday, 6 Jun, 2006

The UWG board met 16 May 2006 in Christchurch.

A few minor issues regarding the insurance scheme were discussed and preparations made for negotiations to take place with FMG on 1 June. Directors will bring a recommendation for the setting of the 2007 levy rate to the AGM on 29 June.

Electoral committee members should diary the 29 June 2006 for the AGM and Grains conference, and the evening prior for the cocktail function. A field trip is planned in Christchurch on the afternoon of the 28 June 2006 for those who wish to attend. Information will be circulated by Federated Farmers in the next couple of weeks.

Most growers will have seen the recent milling contracts released. At this stage Champion contracts are available on the website and we are waiting for the Weston contracts. The Champion selenium added contract with a $1/t premium has been well received by growers and is a good response to an issue we have been highlighting for the last two years.

Although the $25/t lift in prices reflected exchange rate and international prices changes from twelve months prior, there is some question whether prices have been slipping away from import parity. The bigger issue is probably the pricing and exchange rate trends for the next year, with a more general expectation that we will see higher international prices and lower exchange rates following our harvest. We will not be advising growers to keep wheat free but have attempted to highlight pricing trends where possible.

Feed wheat prices have not moved significantly and could be slipping away from import parity more than milling prices. The cost of landing bulk feed wheat in port is around $280/t plus around $30/t to get it to mill. Container product is around $60/t higher in costs than the bulk plus freight inland.

We don't have a good info source for milling wheat import prices but statistics would show the new contract prices being closer to import parity than feed wheat.

Prompt feed wheat is selling at a premium with spring delivered prices up to around $300/t.

Some growers have expressed concern that the UWG Chairman may have a potential conflict of interest being involved in a feed milling business. The UWG board considered this issue and concluded that growers concerns are not founded. An attempt will be made to have other board members comment publicly on feed wheat issues where appropriate.

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