Grain and hay report

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. To subscrive to the 'grain & hay report' and get it emailed to you weekly, click the link below:

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NATIONAL BACKGROUND COMMENTS: Week ending 10th May 2013. Please note that direct links to reports on each dairy region immediately follow this national summary for grain and hay.

International & National Summary - Grain:

• Grain prices are up across the board in Australia by about $15 per tonne in this last week; only exception was WA where prices were flat but WA had a steep rise a few weeks back. Why the lift in prices?
• While the northern hemisphere spring is often described as the “silly season” for grain markets due to the volatility of prices depending on what the weather forecasts are for US, EU, Russia and China, there are probably three drivers behind our local market at the moment.
• They are: (1) uncertain planting conditions for the US corn crop where planting is running a few weeks late due to wet weather; (2) the volatility and slide of the A$ (this raises local grain prices) as a result of the RBA cut to interest rates; and (3) the extremely dry conditions in all of south-eastern Australia, where farmers are now starting to stop planting. They have planted about 40-50% but with no rain to germinate the crop, they are now holding back to see a break before committing more seed to the ground.
• May/June will remain a critical period to watch as far as grain price direction is concerned for the last half of 2013 and into 2014. The US, Canada, EU and Black Sea will each need to see normal weather during this period if we are to see the easing of grain prices as widely expected. If not, then the market will remain concerned about feed grain supplies and prices could remain firm.
• All of South-Eastern Australia is suffering from one of the driest 6-9 month periods we have seen, an autumn break to see planting completed is keenly awaited.
• For the dairy regions, if you are close to a grain growing region (say Darling Downs, Central NSW, Northern and Western Victoria, SE south Australia) then you can expect current wheat prices in the $270-300/tonne range, whereas regions which “import” grains (North Coast NSW, Atherton Tableland, Bega Valley, Gippsland) are more likely to see grains in the $300-350 range to cover the freight costs ($350-400 for Tasmania).
• The range between buying and selling ideas will be within a larger range than usual until the weather gives us more certainty about what the season has in store. It is apparent that some growers are holding remaining grain (and there is less in farmers’ hands this year than usual) until they feel confident of the next season.
• If the 2013 global crop comes in as expected (i.e., average yields), wheat prices could be down to more like $220-250 by December 2013 compared to around $300 in December 2012. The most important question for dairy farmers is not trying to pick the bottom, but to make a start on covering some of their forward grain needs if the quoted prices allow them to make a margin, taking into account the expected milk pricing that the industry awaits from mid 2013.

National Summary - Hay:

• As buyers become more desperate to secure fodder prices are on the rise again. Reporting is becoming increasingly difficult as there is a lot of movement in the market and variation between fodder grades, particularly in southern Australia.
• It is important to ensure that both buyers and sellers look out for themselves by using written contracts for all fodder transactions, especially in such a tight market as we are currently seeing.
• The biggest price rises this week were in South West Victoria and Gippsland. With both regions now desperate for rainfall and very little feed available, the situation is becoming desperate for buyers in these regions.
• Supply of fodder for all grades and types is low. Most hay in storage is under contract and while some lower grades of hay and straw are still available. Again buyers are advised to source their requirements as early as they can.
• Cereal hay and vetch are in shortest supply. Reporting this week has indicated that vetch supplies will not hold on much longer and cereal hay is in very short supply.
• If good rain fall was received in the Southern parts of the country and western QLD, some fodder may be released onto the market. Most casual hay traders are ensuring their own fodder reserves are secured and have stopped trading.
• Demand for hay from feedlots in QLD is starting to increase as Western QLD and areas in the Northern Territory have stayed extremely dry, with station owners opting to destock rather than freight hay.
• One point to note is there are some exceptional feed analysis results coming through this year, and even though sellers are remaining firm on price, what looks expensive on a per tonne basis might actually be reasonable value when costed on the value of ME and or protein.
• Supply of fodder is a particular concern for South East, SA, South West Victoria, Tasmania and Gippsland. In these areas freight is the biggest cost as local growers are struggling to meet the increasing demand for fodder.

Notes: Prices are estimates based on delivery to dairy farms with allowance for freight, storage, and marketing costs, but exclusive of GST. Wheat prices are for the relevant stockfeed wheat available in a region (ASW, AGP, SFW1 or FED1) and F1 for barley.

Notes: Hay prices are delivered, GST exclusive based on shedded hay without weather damage, of good quality and colour. It should be noted there is a wide variation in quality for hay, so prices are indicative for a mid-range product.