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Dairy Australia - Hay and Grain Prices

03 March 2014

Dairy Australia - Hay and Grain Prices - Week Ending 27 February 2014Dairy Australia - Hay and Grain Prices - Week Ending 27 February 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:

  • For the second consecutive week international wheat futures increased, this week supported by continued concern for the condition of the US crop. There has already been reasonable snowmelt in the US and with a forecast cold snap on the way winterkill on dormant crops is causing unease. CBOT wheat futures saw drastic increases ending the week up A$10/t to close on Tuesday night and A$253/t. The Australian dollar had little impact on prices this week remaining relatively unchanged.

  • Recent inclement weather in the northern hemisphere saw the USDA outlook conference peg US and Canadian wheat acreage down from where it was last year. Any current supply estimates are a long way out time-wise, but with demand remaining strong internationally any news is having an impact on the market. The coming months will see further grain become available on the international market with the northern hemisphere spring on the way and reports Canadian logistics will be fully functioning again following recent restrictions due to the cold weather. With a large quantity of grain hitting the market at once grain prices could potentially face downward pressure in the coming months.

  • Despite international values rising this week, domestic prices have only reflected a small percentage of this change. Many analysts are predicting there is little upside in the Australian basis and Australian values will now be dictated strongly by international market movements.

  • The north Australian wheat market is seeing little activity, consequently rallying further as traders drive demand against poor support from growers. Growers are not prepared to lock away new season crop through contracts and end users are reluctant to take more cover hoping for rains to bring down inflated prices. Recent rains through parts of QLD and NSW have been disappointing and done little to subdue prices. While the risk of another poor winter crop increases each day, expect there to be a significant price drop if weather changes favourably for growers approaching planting.

  • In Victoria and NSW wheat markets there remains a significant discount between feed and milling quality grain. Feed grades are trading below traditional price spreads that will close in the coming months. This could represent buying opportunities for remaining old season grain before potential price increases. In SA and WA the gap between the two has already narrowed with feed grades trading at ASW1 values.

  • Barley prices across the country continue to find ground despite being expensive relative to wheat. Demand is coming from dual parties with both the export and end user markets sourcing the commodity. The export states of WA and SA rallied $4-$6/mt as buyers continued to be active due to increased Chinese interest for bulk shipments. With fully booked shipping stems for the next two months expect this demand to be maintained in the short term.

National Summary - Hay:

  • The demand for fodder is increasing as we head toward autumn. Most notably demand from South West Victoria and Gippsland has picked up in the last few weeks.

  • Steady demand from the Northern markets is starting to have an impact on both supply and price of hay in Southern NSW and Northern Victoria.

  • We have seen an increase in the demand in WA for high grade cereal hay due to the dry conditions.

  • Protein hay supplies will be tight in 2014. Any buyers seeking protein hay for 2014 are encouraged to source their requirements now.

Northern Australia:

  • The Atherton Tablelands and South East Queensland are still reporting steady demand for hay. Feedlots are the most active buyers.

  • Fodder supplies are low right across Northern Australia. Buyers are now making enquiries in North Central Victoria and South Australia to source hay.

  • Updates to the national drought assistance packages announced this week could result in increased demand for hay in the coming weeks.

  • With low cattle prices and some farmers entering their second or third year of drought, many hay buyers are now looking for cheaper feed sources, such as sorghum stubble to meet demand. Anyone feeding drought stressed crops/novel feeds to livestock is encouraged to show due caution, have the hay tested and be wary of issues such as prussic acid or nitrate poisoning.

  • There are reports of straw being baled in Northern NSW from 2013 winter crops as a cheaper roughage source. This straw is moving quickly.

Southern Australia:

  • Demand for hay from Queensland and Northern NSW continuing to put pressure on prices in the Southern regions. Lucerne hay prices strengthened again in some regions this week. Supply is getting tighter but demand remains steady.

  • Demand for cereal hay and protein hay has picked up in to Gippsland and South West Victoria as the season has dried off.

  • There is clear indication that supplies of protein hay are going to be tight later in 2014. In key lucerne hay growing regions both high water prices and poor baling conditions, along with steady demand have impacted supply.

  • Vetch hay supplies are becoming tight. Quality vetch hay in particular is difficult to source.

  • The supply of straw is good at present. Quality is variable, although mostly good.

Western Australia:

  • Hay trading volumes are picking up, with interest in high grade cereal hay from the dairy and livestock sectors.

  • Lucerne hay is in short supply.

  • Low yields were recorded for pasture hay and silage in 2013 therefore hay supplies are down. Buyers are now looking for other hay varieties to meet demand.

  • Straw production is now complete with big yields and good quality being reported.

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