Grain – Hay Report – 9 January 2014

International & National Summary – Grain:

• Since our last publication three weeks ago there hasn’t been considerable news in the wheat markets to buck the trend of falling international values. CBOT March futures have fallen 7.00 USc/bu since our last report, closing on Monday night at 605.75 USc/bu. With many traders taking advantage of the Christmas break and northern hemisphere growers concluding planting market activity has been relatively quiet.
• Market attention is focused on the USDA report, scheduled to be released this Friday. It is expected the USDA will revise Argentinian wheat production this week to somewhere around 8-9Mt after leaving it unchanged last month at 11Mt. Most external estimates including the Rosario grain exchange put estimates at 9.5Mt. There will only be significant price reaction to the incoming report if it is contrary to what the trade expects.
• The cold conditions affecting the US winter wheat crop are causing production concerns. Where snow cover is insufficient, cold weather is striking the crop with the possibility of winter kill. Some analysts are estimating 15-20% of the US hard red winter wheat is at risk but the impact is extremely speculative and difficult to quantify. The added element of uncertainty is supportive of Australian values but a relatively minor factor at this early stage.
• Large trade volumes booked in the last week by both Egypt and Algeria should warrant support to current Australian values. The tenders were in excess of 500,000mt and quality dependent will be supportive of Australian grower bids.
• The Australian dollar seems to have found stability around the 89 USc mark holding firm for the past three weeks. This week saw the Australian dollar close on Tuesday night 89.66 USc.
• Australian cash values have fallen since late December but are still holding strong relative to International futures. Two separate key regions define the feed market in Australia. These are separated Northern Australia and the Southern export oriented states. Continued dry conditions in North Eastern Australia have led to a severe shortage of grain. Feed prices in the north continue to increase as grain is sourced from further south in a domino effect. This is reflected in prices rallying around the Port Kembla zone to satisfy demand. Due to the feed shortage and in combination with the dry conditions stalling sorghum planting in Northern NSW and QLD, it is expected feed prices will hold into the year.
• In contrast the southern production states experienced excellent yields for the season with no shortage to speak of. Downward pressure on wheat values in the region has seen prices ease over the last fortnight. Feed barley in the southern export driven states has defied international market movements, gradually increasing in value over the last three weeks. Harvest values for feed barely saw many growers hesitant to sell. An increase of $15-20/t over the last two weeks will see many growers come to the table providing an opportunity to purchase required grain for later delivery.
• There are opportunities for end users to purchase quality effected discounted grain throughout Australian cropping regions. While tonnages are hard to quantify significant regions down the eastern seaboard, particularly through southern NSW and Northern Victoria were affected by frost. Growers throughout much of Victoria also harvested large volumes of contaminated barley appropriately labelled ‘Wharley’. With all purchases it is imperative to undertake the appropriate quality checks and proper due diligence.

National Summary – Hay:

• Trade remains fairly steady this week; however some buyers are starting to consider their hay requirements for the year ahead which has triggered a slight increase in demand. With many regions drying off quickly and grain prices on the rise, we may see the hay market become more active in the coming weeks. This could impact price, particularly for lucerne hay.
• There are two key take home message from this weeks’ hay report:
  1. We expect to see a shortage of quality protein hay affecting Eastern and Southern Australia later this year. Any buyers looking to secure protein hay are encouraged to lock in their requirements now to avoid high spot market prices later in the year.
  2. There are ongoing reports that the quality of hay, particularly cereal hay, pasture hay and vetch is variable this year. Buyers are encouraged to get a feed analysis and use a trusted hay supplier, or inspect hay, before purchasing new season fodder this year.

Northern Australia:

• Atherton Tablelands and South East Queensland are still reporting steady demand for hay and supplies are low. Demand is from cattle stations in drought affected Western Queensland.
• There is still a steady market for cereal hay and straw from Southern NSW into northern regions. This will impact supply and possibly prices over the coming months for buyers in the southern regions.
• Northern NSW has had some summer storms boosting pasture growth and helping to increase hay yields. Pasture hay yields in this region have benefited from the summer rain but most other fodder types are in short supply.

Southern Australia:

• Most regions are drying off quickly which is affecting summer crop growth and may impact demand for hay in the coming weeks.
• Demand is fairly slow at present with most Southern dairy regions including Gippsland and South West Victoria still benefiting from good pasture growth early in summer. However dairy regions in Northern Victoria and Southern NSW have dried off quickly.
• The last few weeks have seen a spike in lucerne hay prices as buyers try to secure their requirements for the year. Many growers are opting to store their hay until later in the year considering their own hay requirements before looking at their marketing options.
• The pasture hay harvest in key dairy regions such as Tasmania, Gippsland, South West Vic and South East SA saw a slow start. Over the last month production has picked up and should be completed in the next few weeks. Increased interest in pasture hay production will help to re-fill empty haysheds.

Western Australia:

• Hay trading is fairly slow on the domestic market although there is a small amount of interest in cereal hay.
• Straw production is coming to an end with good yield and quality being 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 January rainfall: 0mm (Ave: 243mm).
• YTD: 0mm (Ave: 243). This time last year the tablelands had received 13mm.
• No rain yet this year and is exacerbated by heat.
• Wheat: $ +5 ($377 to $387). Price not increasing as much as other feed grains. Due to CQ wheat being human consumption quality and high protein.
• Barley: $ +23 ($450 to $460). Being sourced from Downs, as far south as Wagga due to low South Queensland supply. Too expensive for any class of animal this far north.
• Corn prices $ +30 ($378 to $388). Harvest underway. Going to gritting uses, which is supporting feed corn prices.
• Sorghum: $ +25 ($336 to $346). No pre sowing rains have lowered prospects for timely sowing of summer crop. Need soil moisture.

• Demand remains firm from cattle stations in drought affected Western Queensland.
• Hay supplies are low and look set to remain tight over the coming months.
• Summer crops have been planted following rain in early December. Decent follow up rain is now sought after to keep these crops going.
• Prices remain firm but steady this week.

• Toowoomba January Rainfall: 3mm (Ave: 109mm).
• YTD: 3mm (Ave: 109mm), compared to 0mm last year.
• Wheat: $ +5 ($344 to $3454). Modest price rise compared to other feed grains. Due to buying against human consumption wheat buyers.
• Feed Barley: $ +22 ($348 to $358). Feedlots buying as far south as Wagga, paying road transport costs.
• Corn $ +30 ($407 to $417). Minimal stocks of old corn crop. New crop not yet available for feed use, being bought for industrial purposes.
• Sorghum: $ +11 ($316 to $326). Opportunities for late sowing of sorghum or but gone. Irrigated crops to be stripped within two weeks.
• Dry, hot conditions reduced summer crop prospects.
• Unlikely to see any change in the trend of increasing grain prices over next three months.
• Feed grain prices and exporter bids for Australian grain will be influenced by Nth Hemisphere crops coming out of dormancy from under snow.

• With the drought continuing in Western Queensland and another week of dry conditions predicted for the Darling Downs demand for hay remains steady.
• Hay supplies are low for all varieties in South East Queensland.
• There is limited cereal hay available locally and with the help of freight subsidies hay continues to move north from Southern NSW.
• Bulk lucerne hay is in short supply throughout the Darling Downs and in key supply regions such as Northern NSW and Central West NSW.
• Lucerne from the Lockyer Valley is available in small squares and the quality is high. There were reports this week that some lucerne hay from the Lockyer Valley has been sent down to Central West NSW, supplying chaff mills who are struggling to source high grade hay.
• Straw supplies are very tight locally as feedlots were very keen buyers behind the baler.
• Prices remain unchanged this week.

• Lismore January rainfall total: 7mm (Ave: 172mm).
• YTD: 7mm (Ave: 172mm), compared to 2mm this time last year.
• SFW Wheat: $ +0 ($378 to $388). Modest buying against human consumption wheat buyers.
• Feed Barley: $ +0 ($371 to $381). Feedlots buying as far south as Wagga, paying road transport costs.
• Corn $ +0 ($417 to $427). Minimal stocks of old corn crop. New crop not yet available for feed use, being bought for industrial purposes.
• Sorghum: $ +0 ($333 to $343). Summer crop prospects quickly deteriorating. Irrigated crops in the Darling Downs should start harvest within two weeks.
• Low grain moisture due to this year’s dry conditions may make summer grains valuable.
• If rain by mid Jan, worth considering sowing sorghum, millet. Deciding use, for feed or sale, later at harvest.

• Demand for hay is steady but has eased over the past month. Patchy summer rains in December have benefitted pasture growth, following a dry winter and spring but growers are now looking for good follow up rain as conditions are drying off quickly.
• Local cereal hay supplies are low due to steady demand through spring and early summer last year. With demand now easing prices have followed a similar trend, dropping about $90 to $200-$250/t delivered.
• Lucerne hay production is underway and quality is good thanks to favourable baling conditions. Supplies are low but with more hay becoming available and demand easing, haysheds should start to be re-filled over the coming weeks. Strong demand from other regions may see demand for new season lucerne pick up quickly in the coming weeks. Prices remain steady at present.
• Following strong demand in the past few months straw supplies are low. Prices have lifted in the past few weeks by $35/t to $160-$180/t.
• Pasture hay production is underway with good quality reported. Due to the patchy growing conditions last year yields have suffered and supplies are likely to be down in 2014. Prices have eased approximately $15 for new season hay starting at $180-$220/t.
• Summer crop plantings are about average this year, with interest in maize, millet and sorghum for silage and hay.

• Forbes January rainfall: 28mm (Ave: 24mm).
• YTD: 28mm (Ave: 24mm), compared to 0mm this time last year.
• No rain this past week in the central west.
• SFW Wheat: $ -5 ($235 to $245). Export bids quietened down over Christmas, not yet fired up. Growers and merchants may be waiting to see if the current market is stable. Prices could ease further.
• F1 Barley: $ +15 ($221 to $231). Risen sharply due to feedlot demand from further north. Harvest is finished. All barley locked down in storage.
• Corn $ +20 ($410 to $420). Risen sharply due to old crop stock being very tight and new crop used up for gritting purposes. Market driven by dairy farmers in Nth NSW.
• Sorghum $ +10 ($333 to $343). Poor prospects for new Northern dryland crop. Late sowing opportunities retreating fast. Worth chasing local irrigated crops.
• Harvest has finished what was not a good year for grain growers. Low yields due to Spring rains cutting out earlier than expected.

• Demand has continued to increase over the past month with hot dry conditions limiting paddock feed. Livestock and dairy farmers sourcing additional feed are the most active buyers.
• Cereal hay and straw continues to move up to Queensland to meet the steady demand from cattle station owners affected by drought.
• Cereal hay supplies are starting to decline due to the steady demand through spring and summer. Early predictions are that there will be limited supplies of carry over cereal hay in Central West NSW by Spring. Prices have firmed about $10 and cereal hay is now trading at $200-$250/t delivered locally.
• Lucerne supplies remain low as most new season hay, both first and second cut was already sold on forward contacts. Third cut lucerne is coming onto the market and is moving quickly. Responding to the strong demand prices increased $25, trading at around $325-$375/t delivered locally.
• Buyers seeking lucerne hay for later in the year are well advised to source their hay as soon as possible. Supplies will be tight for all protein hay (vetch and lucerne) in 2014.
• Demand for straw has picked up in over the past few weeks but prices remain steady at present.
• Prices remain firm but steady this week.

• Bega January rainfall total: 2mm (Ave: 53mm).
• YTD: 2mm (Ave: 53mm), compared to 0mm this time last year.
• SFW Wheat $ -7 ($256 to $266). Country buying for China export shipping containers has eased. This business tends to stop and start quickly, so the premium this activity creates may not be altogether gone.
• Feed barley $ +8 ($244 to $254). Price rise as most of Nth NSW, QLD crop failed. Feedlots rely on two crops a year. Buying barley heavily due to poor sorghum prospects.
• Triticale $ +0 ($246 to $256). Interest from NE Vic, SE NSW piggeries.
• Oats: $ +3 ($226 to $236). Some interest for sheep feed and drought reserves as no sub quality wheat or barley emerged as alternative.

• Despite some good early summer rain the season is drying off quickly. Demand for hay is slow at present but will pick up in the coming weeks if there is no decent rain.
• After early interest in buying cereal hay behind the baler trading has now eased but prices remain steady.
• Supplies of lucerne hay are low in most parts of eastern Australia, particularly in the dry land production areas. Supplies are likely to remain tight this year due to steady demand since new season hay came onto the market a few months ago. Buyers seeking protein hay such as lucerne are encouraged to lock in their 2014 requirements now.
• Straw is available and trading is slow at present.
• Prices remain steady this week due to slow trading.

• Tatura January Rainfall total: 0.2mm (Avg: 34mm)
• YTD: 0.2 mm (Ave: 34mm), compared to 0 mm this time last year.
• Wheat: $ -10 ($255 to $265). Harvest finished Nth of the Divide. Export bids to China disappeared over Christmas, not necessarily permanently. Can switch on and off quickly.
• F1 Barley: $ +10 ($221 to $231). Price rise follows light barley crop in Nth NSW, Qld. Poor summer sorghum prospects. Strong drive south to secure 2014 grain requirements, especially barley.
• Triticale: $ -5 ($253 to $263). Harvest mostly finished. Some still to come off around Violet Town. Price must be lower than wheat to have a place in crushed dairy grains or manufactured stockfeed pellets.
• Feed Oats: $ +3 ($188 to $198). Harvest finished with most coming from Sth GV. Staying in storage for large horse population near by.
• Water allocations of Murray, Goulburn distribution systems remain unchanged from 100%. Regular interval watering programs uninterrupted by summer rains.
• Dryland areas now all dried off.

• With conditions drying off demand for hay is steady. There is particular interest in lucerne hay at present.
• 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 and getting a feed analysis done before making any hay purchases is strongly encouraged.
• Increased demand for lucerne over the past few weeks will put pressure on already tight lucerne supplies. Despite the spike in demand many growers are opting to hold onto their protein hay until demand picks up in earnest in the coming months.
• Buyers who require protein hay (lucerne and vetch) 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.
• Despite a slight increase in trading, prices remain unchanged this week.

• Sale January rainfall: 1.8mm (Ave: 44.8mm).
• YTD: 1.8mm (Ave: 44.8mm), compared to 0mm this time last year.
• SFW Wheat: $ -10 ($307 to $317) Buying for container packing saw local wheat prices lifted by $10 a tonne prior to Christmas. These bids have disappeared but don’t expect this to be permanent as the container export market can turn on and off rapidly.
• Barley: $ +10 ($267 to $277). Victorian feed barley prices are responding to the strong demand from the Riverina for use in the feedlots. The dry conditions in northern Australia preventing sorghum planting are also aiding feed barley prices throughout the region.
• Triticale: $ -3 ($295 to $305). Much of the triticale is already harvested with the remaining crop being concluded around Geelong. Triticale already harvested is of a high quality with much of it sold directly out of the paddock.
• Feed Oats: $ +3 ($216 to $226). The market for feed oats is relatively flat at the moment. Minimal trade is occurring, as any purchases are not for current use but instead being stockpiled.

• Demand for fodder is slow due to good pasture growth.
• There has been a lot of interest in pasture hay production this season due to the lack of carry over hay from 2013. After a slow start to the hay season the hay harvest should be finished in the next few weeks; yields have been good but quality is variable.
• New season cereal and vetch hay may also be of variable quality and buyers are well advised to use a trusted hay supplier, ensure they have their hay inspected and get a feed analysis before purchasing any hay this year.
• Silage production was down this year which may have impacted an increase in the amount of summer crops planted.
• Prices remain steady this week due to slow trading.

• Port Fairy January rainfall: 18.2mm (Ave: 33.8mm).
• YTD: 18.2mm (Ave: 33.8mm), compared to 0.8mm this time last year.
• SFW1 Wheat: $ -10 ($253 to $263). Container packers elevated local wheat prices $20 above bulk exporter bids prior to Christmas. While the current price doesn’t reflect this, expect them to renter the market as container export can switch on and off rapidly.
• Feed Barley: $ +10 ($222 to $232). Victorian feed barley prices are responding to strong demand from the Riverina for use in the feedlots. Much of the barley being harvested is of malt quality, which is not traditionally reflective of the western district also adding to the increase in feed prices.
• Triticale prices $ +0 ($250 to $260). Triticale is a very minor crop within the western district. There is little trading in the market at the moment, as many end users instead prefer to wait for the red wheat to be harvested within the region shortly.
• Feed oats $ +3 ($196 to $206). The market has risen slightly with buying interest being expressed by graziers looking to store on farm for later use. Much of the oats harvested within the area was of milling quality.
• Buying directly out of paddocks is still an option for all buyers as many growers look to offload their grain upon harvesting.
• 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 very productive spring and start to summer, with good pasture growth throughout much of the South West, is keeping most farmers happy at present.
• Big hay yields have been reported, despite a late start and patchy conditions for the better part of the hay harvest. Rain has impacted the quality of some pasture hay.
• We are hearing reports of variable feed analysis results, particularly in cereal hay. All buyers are encouraged to get a feed test before purchasing hay this year.
• Trading is fairly slow but there is continued interest in vetch and lucerne hay. 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 later in the year.
• Prices remain unchanged this week.

• Mount Gambier January rainfall: 25mm (Ave: 27.2mm).
• YTD: 25mm (Ave: 27.2mm), compared to 0.6mm this time last year.
• Wheat $ -8 ($269 to $279) Wheat values have come off since Christmas as domestic values begin to align themselves closer to international values. It is not expected wheat bids will increase substantially in the coming month.
• Feed barley $ +2 ($240 to $250). Barley prices are stronger as the spread between malt and feed barely tightens. Tight feed supplies in northern Queensland may lead to barley being shipped from the southern export regions to northern Australia. The rise in barley prices over the last week may see more growers come to the table to sell, representing an opportunity to purchase required feed.
• Triticale $ +0 ($250 to $260). Much of the triticale being harvested is already committed. Growers prefer to sell directly out of the paddock. There weren’t enormous quantities of grain harvested so direct contact with known growers is the best way to acquire triticale.
• Oat prices $ +5 ($195 to $205) Accumulation of milling oats by exporters is pushing up the price of feed oats.
• Most growers are concluding harvesting their wheat and barley.
• Harvest is still in full swing so there is opportunity to make purchases directly out of the paddock.

• Patchy weather conditions slowed fodder production early on but now the hay harvest is well underway with good yields but some variation in quality being reported.
• Quality of new season lucerne hay has been variable and supply is lower than normal for this time of year. Buyers are encouraged to secure their supplies early to avoid high spot market prices in 2014.
• With trading slow, prices remain unchanged.

• Murray Bridge January rainfall: 4.4mm (Ave: 16.4mm).
• YTD: 4.4mm (Ave: 16.4mm). 0mm this time last year.
• Wheat $ +0 ($243 to $253). Values are down at least $10 since Christmas, as some of the bulk exporters appear to have early shipments covered.
• Feed barley $ +0 ($212 to $222). Feed barley prices have increased over the holiday period. Weaker demand from domestic end users hasn’t seen them improve to the extent that feed barley has increased on the east coast. Higher prices may see more grain available for sale as many growers were previously happy to sit on F1 barely.
• 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). Accumulation of milling quality oats for export is pushing up the lower feed grade feed oats.

• Demand for cereal hay is slow at present and supplies are good.
• 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 should draw to a close in the coming weeks. So far quality has been variable with rain causing issues in some areas.
• Trading is slow and prices remain steady this week.

• Bunbury January rainfall: 0mm (Ave: 11.9mm).
• YTD 0mm (Ave: 11.8mm), compared to 1.6mm this time last year.
• Wheat: $ -5 ($309 to $319). Wheat has fallen over the last two weeks as international factors influence bulk exporters public bids.
• Feed barley $ +0 ($267 to $277). National price increases for feed barley are not reflected in WA values. The record grain harvest is preventing domestic prices from following the national trend.
• Triticale $ +0 ($275 to $285). One major buyer is advertising a $255 delivered Perth price and has had the same price since late December. Sales continue to occur around this number with minimal potential for the price to change.
• Oats -10 ($180 to $190). 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.

• Hay trading on the domestic market is slow at present, although there is a small amount of interest in cereal hay.
• Cereal hay supplies are good due to high yields in the 2013 season; however feed analysis results are showing some variations in quality.
• Pasture hay and silage production was down in 2013, after a wet start to spring resulted in a short baling window.
• Straw is mostly complete with production average or slightly down this season. Yields are good and so is the quality of straw made so far.
• This week prices remain steady and unchanged.

• Smithton January rainfall: 32mm (Ave: 42mm).
• YTD: 32mm (Ave: 42mm), compared to 3.4mm this time last year.
• Most regions received small rains throughout the week up to 7mm.
• Wheat $-10 ($330 to $340). Prices have dropped since Christmas and the number of willing buyers has dropped off significantly. Expect increased activity on the next price spike as growers look to conclude sales.
• Feed barley $ +5 ($310 to $320). The discount to wheat has narrowed significantly over the Christmas break. Merchants have increased bids for barley in the hope of attracting growers to sell. For the last month growers have been content to sit on lower grade barley instead focusing on marketing their higher value grain.
• Triticale prices $ -13 ($315 to $325). Any triticale harvested has been going straight into storage for later sale.
• Oats prices $ +3 ($271 to $281). Mainland oat supplies are now getting tight as late crops being harvested get stored on farm. Many growers are happy to wait until prices rise a further $15/20 before selling.

• After a late start the hay harvest is now well underway and contractors have struggled to keep up with demand.
• Growers are getting steady enquiries for hay with particular interest in lucerne and oaten hay from dairy farmers. Trading remains fairly slow at present due to good pasture growth.
• There were large amounts of cereal hay made this season but quality is variable.
• Lucerne supplies are low and demand is steady. Anyone seeking lucerne hay is advised to secure their requirements now for later in the year, to avoid high spot market prices.
• After early speculation that there may be another shortage of fodder coming into 2014 the tables have turned with large amounts of pasture hay being baled over the past month. This hay will help to re-fill empty hay sheds around the state. Quality is variable.
• Prices remain unchanged this week.