A survey of New Zealand grain growers has revealed there was a lot less feed grain in storage in October, than at the same time last year.
An NZX Agrifax analyst Ivan Luketina, says the Arable Industry Marketing Initiative survey shows dairy farmers are driving the demand for feed barley.
"With dairy farmers feeding rain to increase production this season, (the price of) feed barley has increased by over $50 a tonne in Canterbury, and it is selling at a premium to feed wheat," he says.
There was just 32,000 tonnes of feed barley left unsold at October, with some industry analysts say points to a feed shortage before the next harvest.
There were 87,000 tonnes of sold barley remaining in October , which was expected to act as a buffer to the unsold feed in storage, but very high levels of deliveries in October and early November now pointed to a very tight supply towards the end of the year.
There was still about 52,000 tonnes of feed wheat in storage, and this was expected to be carried over into 2014.
But Mr Luketina said that if there was another factor, such as a drought, it was entirely possible that feed wheat would also be consumed.