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Three actions for August, suggested by our presenters at this year's Seasonal Updates

Where are we at?

  • After a dry start to the year, June and July rainfall has helped to restore soil moisture levels. 
    For an up to date map of soil moisture across Australia, click here
  • A good start in key cropping regions points to good yield potential, meaning feed will be available even if spring is dry.
  • However, dry conditions persist in parts of NSW and Queensland, and fodder transport subsidies for these areas will again put upward pressure on the market. There is strong demand for fodder outside dairy. Buyers will need to be proactive in securing feed.
  • In Victoria, water in reserves have declined over the last two seasons so we are at a lower starting point than last year. However, inflows are increasing and catchments are starting to show a response. This has been reflected in small increases in allocations between 1 July and 1 August 2019.
    For the latest allocation information from the Northern Victorian Resource Manager, click here.
  • In NSW Murray, the High Security allocation is at 97% but General Security allocation is forecast to remain low until November 2019. 
    For the latest information on NSW allocations, click here.
  • Even with average inflows, water prices are likely to remain firm. Dry conditions could put continued upward pressure on the market. Water availability in the NSW Murray and Murrumbidgee has a very strong influence on market prices in Victoria. Carryover across the southern connected Basin is 600GL less than this time last year.

  • The climate forecast for spring is pointing to dry conditions although remains very uncertain. The Indian Ocean Dipole (IOD) is positive which typically means a drier winter-spring for south eastern Australia. However, this could also bring late frosts or hot conditions which may impact crops with failed crops being cut for hay.

Three actions for August

Given the circumstances, presenters at our Seasonal Update events suggested business operators focus on these three actions for August.

Review your budgets

  • Start by reviewing your current position and identifying any feed and water gaps
  • Test your budget for different scenarios including average and dry conditions. The Murray Dairy Feed and Water Budget Tool might be useful. 
  • Get an income estimate from your processor, rather than working on "announced prices"
  • Focus on the marginal, rather than the average
    With your DairyBase data, you can use the Murray Dairy Business Tool to test the impact of small adjustments (such as cow numbers, home grown feed production and water prices) to your business under different scenarios.

Contact growers about your feed requirements 

  • Good relationships are key, especially in the face of competition. Growers are looking for clear market signals. 
  • Formalise your commitments. AFIA has contract information for buyers and growers. 
  • A number of growers have increased their storage on farm to preserve quality feed. This could provide opportunities to secure feed now, for delivery later in the season.
  • Hay and grain prices are likely to come down between now and harvest. Look for opportunities to secure cheaper feeds (without compromising on quality).
  • Purchase feed on a dry matter basis.

Sort out finance early

  • Lenders will be looking to see that businesses have strategies in place to manage a range of scenarios this season. 
  • From what we're hearing, there can be frustrating delays on finance so the sooner you have these discussions the better. 

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