Grain – Hay Report – 19 December 2013

International & National Summary – Grain:

• No substantial news in the global wheat market this week meant the downward trend continued on the back of last weeks USDA report revealing increased global wheat ending stocks. Without new bullish factors influencing the market it is hard to buck the trend of recent downward movements. CBOT March futures ended the week down 28.75 USc/bu to close on Monday night at 621.75 USc/bu.
• The 13/14 global wheat crop is all but accounted for now as the Southern Hemisphere harvest comes to conclusion. With the Australian harvest almost over, the Argentine crop is the only remaining ‘unknown’. The market has a high level of certainty over global wheat quantity and quality at this time of year, as a result traditionally December is a quiet time of year with less market volatility, with few market developments in the international wheat crop. The Australian harvest is quickly reaching conclusion with only the far southern regions still going. The production estimates indicate a good national crop reiterating publications in recent months. Australian Crop Forecasters released estimates last week at 25.2Mt while ABARES and USDA were 26.2 and 26.5Mt respectively.
• Australian grain values have been supported by a low Australian dollar throughout the harvest period. This week saw the AUD dip below 90 USc for the first time in four months to close on Tuesday night 89.49 USc. Expectations of an upcoming US Federal Reserve announcement continue to drive the currency lower.
• A fall in international futures has not been fully reflected in Australian prices. Domestic grain values continue to hold firm with reports indicating Aussie wheat is still competitive in key exports regions. Strong merchant bids indicate many buyers are looking to reduce risk and lock away requirements early. The strong merchant appetite is playing a key factor in keeping local prices steady.
• The Australian feed market is currently a vast contrast between the two different key regions. On one hand the North Eastern Australian market has a significant supply shortage of feed grain. The region continues to pull grain from neighbouring zones evident by Port Kembla feed prices rallying this week. Due to the feed shortage in Australia’s northern states combined with the dry conditions stalling sorghum planting in Northern NSW and QLD, it is expected feed prices will remain firm in the New Year.
• In comparison the southern export oriented feed markets specifically WA, SA and Vic are showing signs of possible downside. A big year of feed production within these states, coupled with a large global corn and barley crops globally is indicating downward pressure on feed values. With feed barley at heavy discounts to wheat, many feed users are taking advantage keeping a floor in the price for now.
• Despite most cropping regions reporting good crop yields, significant quantities were quality affected due to frost damage and a dry finish. This presents an opportunity for end users to purchase discounted grain. Predominately sold on farm it is imperative to undertake the appropriate quality checks and proper due diligence. Also, late rainfalls at planting time have meant much of the barley produced this year is contaminated with wheat. This new grade ‘Wharley’, particularly evident in the Southern NSW and Victoria holds good value as a feed commodity due to the high protein levels relative to straight barley.

National Summary – Hay:

• Trade has remained fairly steady this week and there has been little movement in fodder prices across the country.
• With hay continuing to come onto the market we don’t expect too much price movement before Christmas. However early in the New Year, as buyers start to consider their autumn/ winter fodder requirements, we expect to see prices starting to increase.
• Across the country there are reports of steady demand for lucerne hay, particularly into Southern QLD. Supplies are low which is uncommon for this time of year. With steady demand from Queensland, water costs increasing in NSW and interruptions to baling in South Australia we may see tight supplies of lucerne hay in 2014. Buyers who have not yet done so are encouraged to start making enquiries for their lucerne hay supplies now.

Northern Australia

• In Northern Australia, particularly Western QLD demand for hay has started to ease slightly with cash flow restricting some buyer’s ability to pay for hay.
• In Northern NSW rain and summer storms over the past few weeks have seen the season turn around. Growers are much more optimistic and there is increased confidence for summer crops; millet, maize and sorghum planted with the intention of hay and silage.
• Cereal hay and straw supplies are limited locally and hay is moving from as far away as Southern NSW and Northern Victoria.
• Lucerne supplies in Northern NSW are improving following the second cut. Supplies in Central West NSW and Southern QLD remain low.

Southern Australia

• In the Southern market prices have remained fairly steady this week.
• Growers with storage capacity are considering their own requirements for hay, filling empty haysheds and in many cases opting to sit on their hay until the New Year rather than taking the discounted prices on offer now.
• Demand from the dairy industry in the Bega region has picked up, particularly from growers trying to secure cereal hay for 2014.
• AFIA advises anyone purchasing hay, particularly in the Southern regions where baling has been more interrupted by weather conditions, to get a feed analysis done, use a trusted supplier or to inspect hay prior to purchase to ensure you know what you are getting.
• Southern Dairy regions have finally had an opportunity to bale pasture hay in the past week. Growers are working to beat the predicted rains and good yields reported.

Western Australia

• The cereal hay season is now completed with big yields and good colour reported. Based on feed analysis quality is variable.
• Rain has impacted the quality of silage and pasture hay, this has resulted with a number of growers opting not to bother with fodder conservation. This will see overall production is down.
• Straw is currently being baled and conditions have been favourable. Good quality and yields are reported.

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.

The information in this report is collected and disseminated with due care and attention to its accuracy, but Dairy Australia accepts no liability if, for any reason, the information is inaccurate, incomplete or out of date.

• Mareeba December rainfall: 10mm (Ave: 102mm).
• YTD: 909mm (Ave: 909). This time last year the tablelands had received 879mm.
• 14mm of rain this week on average following on from a dry week last week.
• Wheat: $ +0 ($372 to $382). Consistent with the previous weeks, there is only being human consumption quality wheat left in this area; this will make use for feed grain rather expensive.
• Barley: $ +2 ($427 to $437). Freight offsets needed to cart in grain from south are pushing prices through the roof not to mention strong demands from other stock feed markets.
• Corn prices $ +5 ($448 to $458). With old crop carryovers levels very low, except in the Riverina, most if not all the early crop will be taken up for corn gritting, this will push up feed prices.
• Sorghum: $ -3 ($311 to $321). Too early for CQ sorghum crops to go in yet. Signs for sowings in January are promising. Scattered storms through the region, a number of places recorded 20mm with Taroom at 25mm over the past week. There are always a small number of sorghum hectares sown in Sep/Oct in CQ.

• Demand from buyers on the Tablelands has eased a little in the past few weeks however the cattle stations in drought affected Western Queensland are still seeking hay. They have not had the rain, the Tablelands has.
• Prices may ease in the coming weeks depending on the ability of growers to make hay and the quality of the hay if it is baled.
• Prices remain firm but steady this week.

• Toowoomba December Rainfall: 34mm (Ave: 110mm).
• YTD: 1074mm (Ave: 757mm), compared to 628mm last year.
• 20-40mm of rain this week in many areas of the Downs, but by no means a general rain.
• Wheat: $ +8 ($339 to $349). Feed grade wheat, ASW, APW and H2 are all trading at the same level, this is because of the large stock feed demand across the downs and Nth NSW – wheat is wheat.
• Feed Barley: $ +2 ($326 to $336). Currently a $13 a tonne discount to wheat, both commodities are priced well over the delivered sorghum market.
• Corn $ +5 ($377 to $387). Feed corn supplies are very tight. Holders of grain are waiting for further price rises.
• Sorghum: $ +13 ($305 to $315). Sorghum is by far the cheapest feed grain. The failure of spring rains is preventing a full sorghum crop to be sown as yet.
• As drought conditions slip into place for summer crops, the prices of all feed grains are rising. The light crop prospects, coupled with high exporter interest, including shipments out of the Brisbane container terminal are pushing feed grain prices higher.

• BOM forecast this week suggest that there is no relief from the dry conditions in Western QLD likely for the coming month. Demand for hay therefore should remain steady, despite softening slightly in the past few weeks as cash flow becomes more of a concern for buyers.
• There is limited cereal hay available locally and with the help of freight subsidies some hay is moving north from Southern NSW. Prices remain firm this week.
• Bulk lucerne hay is in short supply. Growers are onto their second cut of bulk Lucerne hay from Northern and Central West NSW, however supplies in Central West NSW are tight and the majority of hay moving into Queensland was contracted months ago.
• Given the big distances hay is moving to reach Southern QLD growers are encouraged to speak to their hay supplier regarding orders for Christmas now to avoid long delays. Buying pre-Christmas may present an opportunity for buyers as the price is likely to pick up again early in the New Year as demand starts to increase.
• Straw supplies are very tight locally as feedlots were very keen buyers behind the baler.
• Prices remain unchanged this week.

• Lismore December rainfall total: 30mm (Ave: 137mm).
• YTD: 1352mm (Ave: 1238mm), compared to 1177mm this time last year.
• SFW Wheat: $ +8 ($378 to $388). Feed grade wheat, ASW, APW and H2 are all trading at the same level, this is because of the large stock feed demand across the downs and Nth NSW – wheat is wheat.
• Feed Barley: $ +2 ($371 to $381). The barley price is being driven up because of local drought conditions and feedlot demand.
• Corn $ +5 ($417 to $427). Feed corn supplies are very tight. Holders of grain are waiting for further price rises.
• Sorghum: $ +7 ($333 to $343). Sorghum is the cheapest feed around currently; mainly due to the crop being heavily feed focused compared to wheat which competes with human consumption.
• Some growers in this region are planning to sow as late as mid January, if they get rain by then. These late sowings will mean some quality issues the later the harvest period goes.

• Following good rain and summer storms demand for fodder has started ease.
• Local cereal hay supplies are low, following steady demand in spring and early summer.
• Lucerne supplies are good, following the second cut in the last few weeks and the quality is good. Prices are still variable with high grade trading at $300-$350 and lower grade $250-280 overall prices have eased about $100t in the past few weeks. Small squares $10/ bale on farm.
• The recent rain has improved grower confidence for summer cropping, with strong interest in maize, millet and sorghum for silage and hay.
• Following strong demand in the past few months straw supplies are low.

• Forbes December rainfall: 20mm (Ave: 58mm).
• YTD: 481mm (Ave: 495mm), compared to 547mm this time last year.
• No rain this week in the central west.
• SFW Wheat: $ +20 ($240 to $250). Strong exporter buying interest in wheat, because it is all of human consumption quality away from frost affected areas.
• Hence export accumulators can buy wheat out of paddocks and fill containers knowing it will be of human consumption quality. When this buying stops local wheat prices should ease by $10 t $15 a tonne.
• F1 Barley: $ +5 ($206 to $216). Prices up and the discount to wheat have widened.
• Corn $ +0 ($390 to $400). Old crop feed corn supplies are very tight through the top half of NSW and QLD. This is where corn production is concentrated and next crop won’t come in till February. Then followed by Riverina in April
• Sorghum $ +0 ($323 to $333). Export buying interest, plus the fears of drought tightening in the summer rain areas of Australia, have elevated grain sorghum prices. Sorghum doesn’t fit if it has to include the road freight from summer rainfall areas (north of Gunnedah).
• Export interest is high for central and Sth NSW wheats, with spikes to the price being added by Chinese buying of wheat up country for filling containers and going out of the Botany Bay container terminal.

• In the past few weeks the season has dried off and trading has picked up. Dairy and feedlots are the most active buyers locally and some hay is moving up to north coast to meet the steady demand from that region.
• High grade cereal hay is difficult to source and is sought after by the chaff mills and horse market.
• Second cut lucerne is now becoming available and is moving quickly. Lucerne supplies remain low as most new season hay is already sold on forward contracts
• Buyers seeking lucerne hay in 2014 are well advised to source their hay as soon as possible to avoid disappointment in 2014.
• Demand for straw is slow at present and growers are opting to save their costs and not cut straw unless they have a buyer. Straw production is likely to be average or down on previous year in 2014.
• Prices remain firm but steady this week.

• Bega December rainfall total: 33mm (Ave: 59mm).
• YTD: 711mm (Ave: 644mm), compared to 839mm this time last year.
• SFW Wheat $ +3 ($263 to $273). Wheat markets are strong as the dry seasonal conditions helped to maintain wheat quality. Southern NSW is a prime area for accumulators to get wheat and to load it into containers for shipment to China out of Melbourne container port putting a strain on supply.
• Feed barley $ +5 ($236 to $246). More buying of barley by major stockfeed companies and feedlots for use over summer and autumn. Some trades involve buying out of paddocks, meaning a saving in delivered cost, but difficult to organise. Always check loads before accepting delivery, by at least doing a test weight check.
• Triticale $ +0 ($246 to $256).
• Oats: $ +5 ($223 to $233).

• The season is drying off particularly in the key areas such as the Riverina, Southern Tablelands and Central West who are key fodder suppliers to the Bega region. Demand remains steady at present.
• There has been particular interest in cereal hay with both oaten and frosted wheaten hay moving into the region to supply dairy farmers who are locking in their 2014 supplies now.
• Supplies of lucerne hay are tight, particularly in the dry land production areas. Second cut lucerne from the Central West is now becoming available; however the conditions have been patchy and hay quality may be affected. Supplies are likely to remain tight as there is steady demand for Lucerne from Northern NSW at present.
• Buyers seeking protein hay such as lucerne are encouraged to lock in their 2014 requirements now.
• Straw is available and trading is quiet at present. Straw is being delivered to Bega for around $150-$170t.
• There is some pea hay available which may be a good and slightly cheaper alternative to Lucerne.

• Tatura December Rainfall total: 31mm (Avg: 34mm)
• YTD: 362 mm (Ave: 488mm), compared to 496mm this time last year.
• Wheat: $ +3 ($265 to $275). Wheat harvest in northern Victoria and Riverina is mostly finished, significant tonnages of weather-damaged wheat from these regions is not going to happen this season.
• F1 Barley: $ +6 ($211 to $221). The margin between wheat and barely has narrowed, but it is still massive.
• Triticale: $ +0 ($258 to $268). A few local triticale crops have been stripped, mostly going into on farm silos. If sold at harvest the commodity will be priced at $20 lower than wheat prices. By storing, growers would hope the discount might narrow over the early months of 2014.
• Feed Oats: $ +0 ($185 to $195). A bit early for grain oats just yet. Most will go into grower silos and await buyer interest from the horse industry centred around Euroa.
• Queues at GrainCorp silos, such as Murchison East, Devenish and also the Dookie sub terminal, Lots of loading shipping containers up country and road freighting them to Melbourne for Shipment to China, presumably for human consumption.

• Demand for hay locally is slow however there are some reports of protein hay (lucerne and vetch) moving from Northern Victoria to Queensland to meet continued demand from that region.
• There are good supplies of new season cereal hay locally however professional hay growers are filling empty haysheds and considering their own hay requirements before looking at marketing options.
• Feed analysis results are showing some variation in the quality of hay this year, particularly for cereal hay and vetch. Sourcing high grade cereal hay may be difficult.
• With second cut Lucerne becoming available there has been a slight increase in trade, prices remain steady this week.
• Rising water costs may inhibit further lucerne hay production in the coming months, combined with steady demand this suggests we may be facing a shortage of protein hay in 2014. Buyers who require protein hay are encouraged to lock in their supply early to avoid high spot market prices or missing out later in 2014.
• Straw production is underway but likely to be average or down on average this year.
• Overall with trading slow, prices remain unchanged this week.

• Sale December rainfall: 25.2mm (Ave: 54mm).
• YTD: 562mm (Ave: 597mm), compared to 615mm this time last year.
• SFW Wheat: $ +3 ($317 to $327) As the wheat harvest is concluding in Northern Victoria it is clear that significant tonnages of weather damaged wheat will not available. Feed quality wheat will be in limited supply and may need to be sourced from outside the region.
• Barley: $ +6 ($257 to $267). The margin between the feed wheat and barley price, now out to $60 a tonne is well outside traditional price ranges for this time of year.
• Triticale: $ +0 ($298 to $308). The last week has seen a number of triticale crops being harvested. Predominately triticale is being stored on farm to be sold for later delivery or being sold directly out of the paddock.
• Feed Oats: $ +0 ($213 to $223). At current values growers are prioritising harvesting their wheat and barley crops before beginning harvesting any oats. There are some early bids but expect the market to mature and strengthen in coming weeks.
• With the chance of weather damaged crop appearing on the market all but gone it may be time to instead focus on pricing forward contracts for summer and autumn requirements.

• Fodder trading is slow due to good pasture growth through spring and growers now concentrating on conserving their own hay.
• Pasture hay has commenced and contractors in Gippsland are very busy trying to keep up with demand due to the dry weather. Given the late start to the baling season some pasture hay quality has been reduced.
• New season cereal and vetch hay may also be of variable quality and buyers are well advised to use their trusted hay supplier, ensure they have their hay inspected and get a feed analysis before purchasing any hay this year.
• Prices remain steady this week due to slow trading.

• Port Fairy December rainfall: 18.2mm (Ave: 47.8mm).
• YTD: 930mm (Ave: 714mm), compared to 759.7mm this time last year.
• SFW1 Wheat: $ +1 ($263 to $273). Western district wheat prices are relatively unchanged compared to surrounding regions. Container packing for China was driving much of the increase in price throughout the state. This demand was predominately for wheat of human consumption quality. Much of the early wheat harvested throughout the Western District has been of ASW1 quality or lower but yielding exceptionally well.
• Feed Barley: $ +6 ($212 to $222). Despite being one of the few regions where the price difference between feed wheat and barley is narrowing, barley still remains at a significant discount. Current prices are seeing many end users price barely tonnages for their 2014 requirements.
• Triticale prices $ +0 ($250 to $260). With a number of different feed wheats grown throughout the Western District that are unable to be exported, the triticale demand is severely less within the region. Yields for these feed wheats already harvested have been exceptionally high.
• Feed oats $ +0 ($193 to $203). Feed oat prices have not yet stabilised with the quantity entering the market still minimal. Expect this to change in the coming weeks as more comes in off the header and the trade begins to naturally stabilise the market.
• Rain delays over the last three weeks should see harvest continue in the area until at least mid January.
• While hot weather is expected this week, high grain moisture due to low temperatures has severely impacted the ability to harvest for long periods of time. Many growers have only been able to harvest for a few hours each day before moisture levels prevent them from continuing.

• A decent break in the weather has enabled growers with hay on the ground to re-commence baling this week.
• It has been a very productive spring with good pasture growth and big hay yields now being reported, despite the interrupted silage season and late start to the hay harvest, due to rain.
• While weather damage is likely to affect the visual appearance and quality of pasture hay locally, the quality of purchased cereal hay may be more deceiving. We are hearing reports this year of variable feed analysis results, particularly in cereal hay. All buyers are encouraged to get a feed test before purchasing hay in 2013/2014.
• Trading is fairly slow but there is continued interest in vetch hay. Prices remain unchanged this week.
• Supplies of protein hay, in particular lucerne look set to be tight this year. Buyers are encouraged to secure their 2014 lucerne hay requirements now to avoid expected high spot market prices in 2014.

• Mount Gambier December rainfall: 12mm (Ave: 38.7mm).
• YTD: 790mm (Ave: 710mm), compared to 648mm this time last year.
• Scattered showers throughout the region with most grain and diary areas receiving 4-5mm of rain this week.
• Wheat $ -3 ($277 to $287) Wheat prices have dropped slightly this week. Potential exporters putting out aggressive bids for bulk cargo have prevented any major falls in price.
• Feed barley $ +5 ($238 to $248). Barley prices from South Australian sources are lower than that from Victoria currently. Plenty of feed barley around in both SA and Vic, which is proving the grain of choice to hold in the short term as growers instead sell higher quality grades for cash flow.
• Triticale $ +0 ($250 to $260). Triticale is sitting closer to barley than wheat in price. Expect this to change as soon to be harvested red wheat comes onto the market.
• Oat prices $ +5 ($190 to $200) Oats are usually the last crop harvested and the same methodology is proving true this year. Most of the oats already harvested are being stored on farm to be sold for a later delivery.
• The canola harvest is coming to a close as many growers begin to harvest wheat and barley.

• Patchy weather conditions slowed fodder production in South East South Australia early on but now the hay harvest is well underway with good quality reported.
• Good pasture growth in spring has prompted an increase in hay yields.
• The supply of lucerne hay production has been low to date and may be tight in 2014. Buyers are encouraged to secure their supplies early to avoid high spot market prices in 2014.
• With trading slow, prices remain unchanged this week.

• Murray Bridge December rainfall: 17.8mm (Ave: 23.7mm).
• YTD: 343mm (Ave: 345mm). 426mm this time last year.
• Harvest was once again slightly interrupted with 4mm of grain slowing delivery throughout the week.
• Wheat $ -1 ($243 to $253). Wheat already harvested is of excellent quality. The drop in price is reflective of merchant bids in the market. The Australian dollar firming overnight-brought export bids back slightly.
• Feed barley $ +0 ($212 to $222). The discount to wheat is slowly coming back to a more normal range. There is the expectation this gap may further tighten in coming weeks.
• Triticale $ +0 ($270 to $280). Seems to be little interest in the commodity at all and very little depth in the market. Much of the trade is instead focused on wheat and barley.
• Feed oats $ +0 ($178 to $188). High yielding crops have been harvested but many merchants have not yet identified a market. Expect them to hold the commodity until higher prices can be obtained.
• Hot weather this week could see many growers get a good run and conclude the harvest. Expect some grain to be available for purchase post Christmas as many growers turn their focus to marketing.

• Baling hay is completed for 2014 and despite some frustrations with the weather growers are fairly happy with this year’s crop reporting big yields, good colour but variable quality in their cereal hay.
• Supply of protein (medic and vetch) hay is less consistent after weather events at baling caused a lot of trouble for growers and resulted in reduced yields and quality.
• Straw production is underway with good quality reported. Due to low demand at present straw production may be average or lower than usual in 2013/14.
• Trading is slow and prices remain steady this week.

• Bunbury December rainfall: 1.6mm (Ave: 21.9mm).
• YTD 816.6mm (Ave: 733mm), compared to 766mm this time last year.
• Dry week and conditions are seeing the harvest conclude rapidly for many growers.
• Wheat: $ -2 ($314 to $324). It has been an exceptional harvest for the bulk of WA, especially southern and central areas. Harvested grain is predominately of human consumption quality.
• Feed barley $ +2 ($267 to $277). By historical standards the price discount to feed wheat currently being experienced is enormous. With the wheat harvest almost done, there is little chance of any weather damaged grain appearing on the market. Expect the spread to be maintained between the two commodities in the short term.
• Triticale $ +0 ($275 to $285). Many people looking to lock away purchases before the grain is harvested. It is common practice to contact growers prior to harvesting their triticale. With minimal supply around what is harvested may trade relatively quickly.
• Oats +0 ($190 to $200). These prices represent milling quality oats. Feed grade oats are making $170 a tonne delivered in Perth. Almost all of what has been harvested is being held in storage rather than being sold for immediate export. Expect sudden price changes when the exporters enter the market.
• Harvest production figures for the state are approaching all time highs.

• With cereal hay for 2013 now completed, growers are reporting high yields and good colour; however feed analysis results are showing some variations in quality.
• It’s estimated that yields for pasture hay and silage are down on previous years, following a wet start to spring and a short baling window.
• Straw production is well underway and is likely to be average or slightly down this year. Yields are good and so is the quality of straw made so far.
• Hay trading on the domestic market is slow at present, particularly for cereal hay, however some pasture hay is moving. This week prices remain steady and unchanged.

• Smithton December rainfall: 38.6mm (Ave: 58.6mm).
• YTD: 1083.2mm (Ave: 856mm), compared to 902mm this time last year.
• Most regions received small rains throughout the week up to 7mm.
• Wheat $+5 ($340 to $350). Wheat shipped to the main island is up $5 this week. Much of the Tasmanian delivered wheat for feed is coming over in containers.
• Feed barley $ +5 ($305 to $315). Barley prices following the movements of wheat over the last week.
• Triticale prices $ +0 ($328 to $338). Any triticale harvested has been going straight into storage for later sale.
• Oats prices $ +0 ($268 to $278). Still early in the season for prices in the market to be released. Much of the crop is still due to be harvested. Expect to pay $20 more than the current published price when prices are released.
• Increased irrigation is seeing more specialty crops being grown locally including poppies and buckwheat instead of traditional feed grains. This means required feed grains are instead imported from the mainland.

• After a very wet spring slowing hay production, the hay harvest is well underway now. Good yields are being reported.
• Demand has eased slightly with new season hay coming onto the market but there are still plenty of enquiries.
• Fodder supplies are likely to be low again in 2014, particularly in North West Tasmania, as demand from the dairy and beef sectors looks set to remain steady and unfavourable weather conditions shorten the window for fodder production. It should be noted that hay supplies in Southern Tasmania are much more stable than in the North.
• Prices remain unchanged this week.