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Dairy Australia - Hay and Grain Prices

29 January 2014

Dairy Australia - Grain and Hay Report - Week Ending 24 January 2014Dairy Australia - Grain and Hay Report - Week Ending 24 January 2014

This report has been commissioned by Dairy Australia to provide an independent and timely assessment of grain and hay markets in each dairying region. It should be remembered that actual prices may vary for quality or other reasons. All prices are quoted are exclusive of GST.
Dairy Australia - Market News

International & National Summary - Grain:

  • The public holiday for US markets due to Martin Luther King Day meant it was a shortened trading week. Chicago March wheat futures ended the week down 10 USc/bu but was directly offset by the Australian dollar coming off. The US financial situation continues to improve which we expect will keep the Australian dollar flat to lower in the coming months. With the Australian dollar losing 2.56 USc over the last week Chicago futures increased A$3/t to close at A$235/t.

  • General market sentiment is that there is further downside potential in international wheat values evidenced by the large speculative net short position in CBOT futures. Global production is almost all accounted for now as key regions have concluded their harvest. Market attention is now firmly focused on the 14/15 crop including the US winter wheat crop already planted.

  • A number of key international transactions occurred throughout the week indicating active demand in global wheat markets. Jordan, Bangladesh and the Philippines all purchased parcels of wheat this week through tender. Key global buyer Egypt bought 295,000t of wheat of Black Sea origin. These transactions are supportive of Australian values with a healthy global appetite still evident.

  • As has been the case since harvest commenced, Australian grain values continue to hold relative to falling international values. A strong export program out of the southern states, including South Australia and Western Australia, coupled with the dry conditions in Northern Australia, have resulted in feed values rising further this week.

  • In the southern export oriented states feed prices have risen sharply this week as exporters look to execute sales to cover required tonnages. Geelong and Port Adelaide port zones prices have increased $13 for feed barley to close at $248 and $225 respectively. This rise, driven by execution into international markets is resulting in high levels of market activity as growers capture the recent price rise. With good quantities of grain available to purchase it may present an opportunity for end users to contract grain for later delivery.

  • Grain prices in the northern states edged higher again this week with dry conditions continuing and grain being sourced from further south. There is however a cap on feed prices, as it will soon become affordable to source grain from export-oriented regions such as South Australia. Expect these inflated prices to continue well into the year until there is sufficient certainty for production.

  • Reports indicate there remains a significant quantity of quality affected grain remaining in on-farm storage across the eastern seaboard. Continue to be vigilant for any remaining frost-affected grain from Southern NSW down to southern Victoria.

National Summary - Hay:

  • Following a hot dry spell across Eastern Australia in the past week there have been a further increases in demand for protein hay.

  • The increase in demand for protein hays seems to be impacting on other high protein stock feeds including canola and cotton seed meal. Price increases in both were observed this week with canola meal reported to be trading at $440t.

  • Again this week we are hearing a clear message that protein hay supplies are likely to be tight in 2014. Any buyers seeking protein hay for later in the year are encouraged to source their requirements now to avoid paying high spot market prices later in the year.

Northern Australia:

  • Atherton Tablelands and South East Queensland are still reporting steady demand for hay. Most of the demand is from cattle stations in drought affected Western Queensland and from feedlots.

  • Fodder supplies are low in these regions, although there are some small quantities of lucerne available at a very high cost.

  • Buyers are now looking for cheaper feed sources such as sorghum stubble to meet demand.

  • There is still a steady market for cereal and lucerne hay from Southern NSW and Victoria into northern regions. This will impact supply and possibly prices over the coming months for buyers in the southern regions.

Southern Australia:

  • Most regions are drying off quickly, affecting summer crop growth and contributing to the slight increase in demand for hay this week.

  • Despite increased interest in lucerne hay over the past few weeks there is still some buyer resistance for lucerne hay in Victoria and South East South Australia upwards of $220-$240t on farm.

  • At this stage many growers in Victoria and South Australia are opting to store their hay until later in the year and considering their own hay requirements before looking at their marketing options.

  • There are large quantities of pasture hay available resulting from the big yielding pasture hay season. Prices may continue to ease in the coming weeks as a result of this good supply.

Western Australia:

  • Hay trading is fairly slow on the domestic market although there is a small amount of interest in cereal hay.

  • Lucerne hay is in short supply.

  • Straw production is coming to an end with big yields and good quality being reported.

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