Grain – Hay Report – 14 February 2014

International & National Summary – Grain:

• International markets were firmly focused on this months USDA report. Changes to global estimates took the market off guard. Robust international demand over the last two months has reduced stock estimates. This strong demand coupled with logistics constraints in the northern hemisphere continues to support international values.
• The Australian dollar edged slightly higher for the week finishing at 89.42 USc on Tuesday night up 1.89 USc from last. The change in currency offset some of the gains seen in CBOT throughout the week. March CBOT futures still finished A$4/t higher to close at A$240/t. As a result domestic prices this week have risen across the board, particularly in the Southern Export states of Vic, SA and WA.
• At this time of year there is little scope for change in global production as the Southern Hemisphere crops have now concluded and the Northern Hemisphere crops are either dormant or yet to be planted. As a result changes in global demand have a more significant impact on market values, as supply figures will not change drastically. The tightening of stocks published in this weeks USDA report due to consistent demand is a perfect example. It saw values rally with global demand exceeding expectation. Expect Australian grain values to remain supported for the short term as we approach the Northern hemisphere spring. Price direction from there will be determined by new crop prospects, but the underlying tone globally is abundant stocks may pull the grain prices lower if average yields are achieved.
• Within Australia export demand continues to exceed exporters’ ability to execute, with the southern port’s shipping stems fully booked. Export figures are well ahead of monthly averages and are playing a key part in maintaining merchant prices. There is the possibility of these aggressive merchant bids easing when the export bottleneck in southern ports clears.
• In southern Australia the last month has seen the spread between feed barley and wheat narrow significantly now sitting between the $25-$30 marks. The price gap is between the two is now at more traditional range. Domestic buying interest for both wheat and barley is minimal as anecdotal evidence suggests end users are drawing on existing contracts to avoid further purchasing. There may be opportunities to purchase feed requirements in the coming months as export demand begins to ease.
• Much of the quality affected grain from either frost or contamination is reported to be sold or being stored on farm. This grain is predominately available through southern NSW and northern Victoria but becoming increasingly harder to obtain. Many growers will be looking to conclude sales in the coming weeks locking away healthy returns for the year. Continue to be vigilant for remaining parcels at discounted prices.
• The Northern feed market resembles an entirely different story. Strong demand with limited annual production is seeing feed prices continue to improve. This week saw buying interest again increase as trades are regularly executing well above published prices. When purchasing feed requirements placing firm offers above published market prices is required to secure supply. The incoming sorghum crop may present opportunities for feed with reports much of the crop will be quality affected due to lack of rain. Low-grade sorghum is not suitable for the export market and could come as a welcome relief for end users struggling to secure required feed.

National Summary – Hay:

• This week we are starting to see strong demand for fodder from Northern Australia have an impact on Southern markets with lucerne and cereal hay prices beginning to increase in some regions.
• Protein hay supplies will be tight in 2014. Any buyers seeking protein hay for 2014 are encouraged to source their requirements now.

Northern Australia:

• Atherton Tablelands and South East Queensland are still reporting steady demand for hay. Feedlots are active buyers.
• Fodder supplies are low right across Northern Australia. Buyers are now making enquiries in North Central Victoria and South Eastern South Australia to source hay.
• 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.
• There are reports of straw being baled in Northern NSW from 2013 winter crops as a cheaper roughagesource. This straw is moving quickly.

Southern Australia:

• Demand for hay from Queensland and Northern NSW is starting to put pressure on prices in the southern regions. Lucerne hay prices firmed in some regions this week as supply decreases but demand remains steady.
• There is clear indication that supplies of protein hay are going to be tight later in 2014. In South East South Australia many lucerne growers have focused their production on lucerne seed rather than hay. In many other key lucerne hay growing regions both high water prices and poor baling conditions have impacted supply.
• Vetch hay supplies are becoming tight. Quality vetch hay in particular is difficult to source. Increased interest in lucerne hay has many sellers describing the market as ‘hand to mouth’.
• The supply of straw is good at present. Quality is variable, although mostly good.

Western Australia:

• Hay trading is fairly slow on the domestic market although there is a small amount of interest in cereal hay from the dairy sector.
• Lucerne hay is in short supply.
• Straw production is now complete with big yields and good 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 February rainfall: 133.2mm (Ave: 248.3mm).
• YTD: 187.0mm (Ave: 491.2). This time last year the tablelands had received 257.2mm.
• With a solid rain this week, this stamps the continuation of the wet season.
• Wheat: $ +5 ($385 to $395). All stored central Queensland wheat is of milling quality.
• Barley: $ +1 ($463 to $473). Barley prices are expensive due to its high freight component and current price premium over central Queensland wheat.
• Corn prices $ +5 ($305 to $315). We should see more corn supplies coming in now from tableland sources and the main summer cropping areas of southern Queensland.
• Sorghum: $ +1 ($344 to $354). Prices are based on sorghum trucked up from central Queensland. Any local sorghum would be at these values, adjusted back to local price of corn then a further price discount.

• Demand remains firm from all regions in Queensland.
• The hay season was prolonged on the Atherton Tablelands due to the patchy start to the wet season. Baling has now ceased.
• Hay supplies are low due to the strong demand. Supplies will not be replenished until after the Rhodes grass seed is harvested in May or June this year.
• Prices have picked up about $25/t as supply tightened over the past few weeks. Pasture hay is now trading at $280-300/t.

• Toowoomba February Rainfall: 0mm (Ave: 118.6mm).
• YTD: 12mm (Ave: 227.5mm), compared to 429mm last year.
• Wheat: $ +1 ($355 to $365). No major change to wheat price this week. But without any summer rains this season so far concerns are starting to creep in about soil moisture levels for winter wheat cropping plans.
• Feed Barley: $ +1 ($349 to $359).
• Corn $ -5 ($372 to $382). With the downs crop now coming off, this has brought corn prices back to a sensible relativity.
• Sorghum: $ +4 ($332 to $342). Crops being stripped are of a variable quality.

• Hay supplies are low for all types in South East Queensland.
• Demand remains steady and cash strapped buyers are trying to source lower grade, lower cost hay and roughage where possible. There are reports of failed sorghum and low grade straw being baled between Southern Queensland down to Central West NSW to meet this strong demand.
• Fodder is now being sourced from Southern NSW, Victoria and South Australia to meet demand but freight is adding considerably to the cost of hay.
• There is limited cereal hay available locally with most being sourced from other regions; there is particular interest from South Australia and Southern NSW. Feedlots are the most active buyers.
• Bulk lucerne hay is in short supply throughout the Darling Downs and is now being sourced as far away as Shepparton in Victoria. There have also been reports of lucerne hay moving north from Keith in South East South Australia.
• Straw supplies are very tight locally.

• Lismore February rainfall total: 12.6mm (Ave: 147.3mm).
• YTD: 96.4mm (Ave: 319.5mm), compared to 296.8mm this time last year.
• Mid North coast more variable rainfall this week.
• SFW Wheat: $ +1 ($389 to $399). Wheat is an inland commodity for New South Wales. Wheat available to this region is all of human consumption category.
• Feed Barley: $ +1 ($384 to $394). All barley is trading at similar price through Northern New South Wales both inland and coastal.
• Corn $ -5 ($367 to $377). Feed corn prices are lower for local corn. It follows new supplies now being stripped also in southern Queensland, North and West of New South Wales and also Liverpool plains.
• Sorghum: $ +5 ($350 to $360). As Liverpool plains early sown crops start to come off with low yields, domestic buying interest in sorghum is increasing.

• Demand from Northern NSW remains strong. Livestock producers and feed lots are the most active buyers.
• Local cereal hay supplies are low due to steady demand.
• Due to dry conditions it is expected yields for all hay; particularly lucerne hay will be down again this year putting further pressure on the supply for later in 2014.
• Lucerne hay supplies are low, due to low yields and steady demand. Buyers are now sourcing hay from Victoria and South Australia to meet demand.
• Following strong demand in the past few months straw supplies are low. Some growers are now bailing 2013 stubble to meet the demand for roughage from Northern and Western NSW.
• Pasture hay production is underway with reports of good quality being reported, however feed analysis has shown some variation in quality.

• Forbes February rainfall: 0mm (Ave: 56.6mm).
• YTD: 56mm (Ave: 80.2mm), compared to 34.6mm this time last year.
• No rain this week in this region, or just as importantly, in any New South Wales area to the north.
• Summer northern drought now biting deeply.
• SFW Wheat: $ +0 ($256 to $266). Current season wheat is all of human consumption therefore there is competition between dairy farmers and human consumption buyers. Logistics for getting wheat to Port Kembla is not as easy, as from farms in South Australia or Western Australia to their ports.
• Higher value for Australian dollar is holding wheat prices down.
• F1 Barley: $ -2 ($242 to $252).
• Corn $ -5 ($410 to $420). Corn prices down on greater supply particularly from northern irrigated crops and coastal crops. Price range includes road freight down from summer rainfall areas.
• Sorghum $ +4 ($370 to $380). Incoming sorghum prospects tighten as new crops are being stripped and returning low yields.

• Demand has continued to increase with hot dry conditions limiting paddock feed. Livestock and dairy farmers are the most active buyers.
• Cereal hay is in low supply due to the steady demand from drought affected western Queensland, as well as increasing local demand. Many buyers are now looking to Southern NSW to meet demand. Where it can be sourced locally produced cereal hay is trading for $260-$300t.
• Lucerne hay growers are up to their third or fourth cut. Yields are low and quality is variable due to the hot dry conditions. Supplies are low and demand is strong. Prices are firming and it is now hard to source lucerne locally under $300/t on farm.
• Summer crop plantings were down this year and yields are likely to be well below average. There is some interest in baling forage sorghum from feedlots.
• Straw is also in strong demand and is trading for $120-$130 on farm.

• Bega February rainfall total: 0mm (Ave: 98.5mm).
• No rain this week making it a dry fortnight.
• YTD: 17mm (Ave: 150.9mm), compared to 75.6mm this time last year.
• SFW Wheat $ +0 ($270 to $280). The higher value of Australian dollar holding wheat prices down.
• Feed barley $ -2 ($258 to $268). Barley prices have been hovering at $10 to $12 a tonne discount to wheat for some time. We expect this to widen to $20 to $25 a tonnes possibly after a significant rain is received in the summer rainfall areas of New South Wales.
• Triticale $ +0 ($261 to $271). Price is steady. Very few growers are currently offering triticale; they are waiting for an improved demand in winter.
• Oats: $ +0 ($246 to $256). There is demand for oats in grazing areas of south coast and southern slopes to keep for feed reserves.

• Strong demand for cereal hay from Queensland will impact the supply in southern NSW later in the season. Buyers should expect prices rises in the coming weeks and may be forced to source hay from further afield later this year.
• Supplies of lucerne hay are low in most parts of eastern Australia, particularly in the dry land production areas. Lucerne hay can still be sourced from irrigation districts in Northern Victoria and the Riverina. Supplies will be very tight later this year due to strong demand. Buyers seeking protein hay such as lucerne are encouraged to lock in their requirements now.
• Supply and quality of new season straw is good. Trading is slow at present. The price for new season straw is around $110-$120 delivered.

• Tatura January Rainfall total: 0mm (Avg: 34mm)
• YTD: 10mm (Ave: 68mm), compared to 4 mm this time last year.
• No rain this week and the hot temperatures continue.
• Wheat: $ -1 ($252 to $262). Wheat prices are being held as the value of the Australian dollar keeps rising. It is now at 90 US cents.
• F1 Barley: $ -2 ($229 to $239). Barley discount to wheat is now back in its traditional discount range. Some barley is being sent north to the drought areas.
• Triticale: $ -2 ($248 to $258). Triticale is currently trading above the traditional discount to wheat. Growers holding triticale in farm silos are more interested in selling it in winter.
• Feed Oats: $ +0 ($207 to $217). Quite strong demand for feed oats now, as more reports come in about an impending El Nino later this year.

• Demand for hay from local dairy farmers has increased slightly over the past few weeks.
• Increased demand for cereal and lucerne hay from northern Australia will put pressure on supply and prices later in the year.
• Protein hay (lucerne and vetch) is in fairly tight supply already. Vetch hay can be sourced from the Wimmera/ Western Victoria although quality is variable.
• Demand for lucerne from around Shepparton and further South is now coming from as far as Northern NSW and Queensland. Prices remain steady this week but are likely to pick up in the coming weeks.
• Straw production is underway and it looks set to be an average or above average season.
• New season straw is trading at $90-$110/t delivered on farm.

• Sale February rainfall: 3mm (Ave: 43mm).
• YTD: 24mm (Ave: 88mm), compared to 6mm this time last year.
• SFW Wheat: $ -1 ($302 to $312). Wheat prices have been following exporter bids and the rising value of the Australian dollar against US cents is preventing any price rise at present.
• Barley: $ +0 ($275 to $285). Barley is currently trading at a discount to wheat of $27, more than the traditional range. The exchange rate at 90 US cents is making it difficult for prices to rise.
• Triticale: $ -2 ($293 to $303). Triticale has returned to its traditional price position against wheat and barley.
• Feed Oats: $ +0 ($229 to $239). There has been steady buying of feed oats from north eastern and western Victoria, noting an El Nino is in prospect for later this year.

• Demand remains steady for lucerne and vetch hay but is slow for all other hay varieties.
• The supply of lucerne hay is largely hand to mouth at this stage. We expect lucerne hay prices to start to increase in coming months as supply becomes tighter.
• It’s been a big year for pasture hay production with good yields, but variable quality being reported.
• Due to reports of variable quality hay, all 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.
• Some straw is available in Gippsland but quality is variable. There are still good straw reserves in North Central and Western Victoria at this stage.
• Prices remain steady but unchanged this week.

• Port Fairy February rainfall: 0mm (Ave: 32 mm).
• YTD: 20mm (Ave: 66mm), compared to 17 mm this time last year.
• SFW1 Wheat: $ -1 ($248 to $258). Wheat prices are under pressure all through Australia, as the value of the Australian dollar goes back to 90 US cents against the US dollar.
• Feed Barley: $ -1 ($229 to $239). Barley is almost back to within its normal price discount to wheat of $20 to $25 a tonne.
• Triticale $ -2 ($245 to $255). Triticale is trading over its traditional discount to wheat.
• Feed oats $ +0 ($216 to $226). Demand for feed oats has increased following warnings of a likely El Nino later this year.

• Prices have picked up this week as demand starts to increase from local dairy farmers. Competition from other markets is now starting to impact hay supplies throughout Victoria, prices firmed this week as a result.
• There are good stocks of cereal hay but quality is variable. Supplies may come under pressure later in the year with ongoing demand from Northern Australia. Prices were up $20 this week due to increased demand with cereal hay now trading for $180-$200/t delivered for better quality hay.
• Lucerne hay is becoming hard to source. Prices are now $300-$320/t delivered to South West Victoria, up $60 this week. Interest from other buyers, including hay processors and livestock producers in Northern Australia is starting to impact on supply in Victoria. Further price rises are expected in the coming months due to tightening supply.
• Vetch and clover hay are still moving into south west Victoria. Good quality vetch is difficult to source and is trading for $270-$280/t delivered. Clover hay is in limited supply but still available for now, $230-$260/t delivered.
• Pasture hay is in good supply but quality varies. Good quality pasture hay can be purchased for around $160-180/t delivered.
• There is plenty of straw available and quality is good, $130-$140/t delivered.

• Mount Gambier February rainfall: 0.2mm (Ave: 25mm).
• YTD: 28mm (Ave: 52mm), compared to 20mm this time last year.
• No rain this week and the hot weather continues.
• Wheat $ +0 ($268 to $278). Wheat is a major export commodity and is therefore getting stuck by the rising value of the Australian dollar. Exporters prefer to work through one of the South Australian ports rather than Portland.
• Feed barley $ +0 ($248 to $258). Like wheat, barley prices are stuck by the rising value of the Australian dollar, as it is a major export commodity.
• Triticale $ +0 ($255 to $265). Triticale is trading at a significant discount to wheat at this time but most holders of the grain are holding it for a stronger demand in winter.
• Oats $ +0 ($209 to $219). Oats are being purchased as growers offer them.
• Grain is trading lower in South Australia compared to Victoria, as it is further away from the drought demand for grain from northern New South Wales.

• Hay trading remains fairly slow at present, typical of this time of year. Enquiries for good quality pasture/clover hay and cereal hay are now starting to come from the drought affected regions in Northern Australia. Local dairy farmers are also starting to purchase straw in preparation for autumn calving.
• Cereal hay is available but quality is variable. Prices remain firm at $140-$180/t on farm. Demand from the north now is expected to put pressure on supplies in the southern markets later in the year.
• Demand for lucerne hay is starting to pick up with reports some hay is moving up to Queensland from the Keith region. Locally supplies are lower than average due to competition from the seed industry and poor baling conditions. Demand from outside the region now will put pressure on the local market later in the year.
• Lucerne hay prices are already firm sitting at $250-$280/t on farm. Buyers seeking lucerne or vetch hay should do so as soon as possible. These prices will only increase in the coming weeks and months.
• After a big yielding season many local growers have filled empty hay sheds with pasture hay for their use. Quality is variable. It is unlikely there will be much good quality pasture hay available for trading later in the year.
• Straw is available and quality is generally good.

• Murray Bridge February rainfall: 1mm (Ave: 17mm).
• YTD: 10mm (Ave: 33mm). 24mm this time last year.
• Wheat $ +3 ($239 to $249). Strong exporter demand for wheat to go out through a South Australian port. South Australia is the only state this week where wheat prices have lifted, despite a rising Australian dollar.
• Feed barley $ +2 ($221 to $231). Similar to wheat this week, strong exporter demand has allowed for prices to rise.
• Triticale $ +0 ($230 to $240). There is not much interest in triticale at this time and is a purely domestic grain. More triticale will come forward in winter.
• Feed Oats $ +0 ($183 to $193). Some traders are trying to aggregate export quality oats from east of Port Augusta locations. If they do not get enough to fill a ship, they will be turned back onto the domestic market over winter.

• Demand for hay on the domestic market is starting to pick up with some hay moving into Northern NSW and Queensland. These buyers are mostly seeking cereal hay at present.
• Cereal hay supplies are good but quality is variable. Some frosted wheat hay is available, generally of good quality. Northern buyers are paying between $140-$180/t on farm in Central SA.
• Supplies of protein hay (medic and vetch) are low and may be difficult to source later in the year.
• Straw quality has been good and supply is average.
• With trading slow prices remain steady this week.

• Bunbury February rainfall: 0mm (Ave: 7mm).
• YTD: 0.4mm (Ave: 19mm), Compared to 2mm this time last year.
• No rain in the southwest dairy areas this past week, nor past month as the annual summer dry continues.
• Wheat $ -5 ($295 to $305). The higher value of the Australian dollar is making it difficult to maintain the wheat price. Western Australia is predominantly an exporter of wheat; however some domestic buyers are dropping prices in response to the bumper crop.
• Feed barley $ +0 ($280 to $290). Strong exporter demand for barley continues. One vessel loaded 77,000 tonnes of feed barley for Saudi Arabia. Domestic buyers are having no trouble accumulating barley at these prices.
• Triticale $ +0 ($275 to $285). No price change since before Christmas. Most will now be stored on farm with sales linked to back loading fertiliser trucks in April/May.
• Oats $ +0 ($180 to $190). Some storms this week in cropping lands north and east of the Port of Geraldton will bring on some summer grazing. This will reduce the demand for oats in the area.
• The harvest for wheat, barley and canola in Western Australia has come in at a record 17.2 million tonnes.
• This came despite a lean harvest in the grain areas behind the Port of Geraldton.

• Hay trading on the domestic market is slow at present, although there is some interest in cereal hay.
• Cereal hay supplies are good due to high yields in the 2013 season however feed analysis results are showing variation in quality.
• Lucerne hay is also sought after but supply is low.
• Pasture hay and silage production was down in 2013, after a wet start to spring resulted in a short baling window.
• Straw bailing is now complete with production about average. Both yields and quality were good this season.
• This week prices remain steady and unchanged.

• Smithton February rainfall: 0.6mm (Ave: 32mm).
• YTD: 35mm (Ave: 74mm), Compared to 28mm this time last year.
• No rain within the North West coast areas this past week, making it a dry fortnight. Also, no rain on King Island.
• Wheat $ +0 ($330 to $340). The Australian dollar at 90 US cents makes it difficult for wheat prices to show any increase.
• Feed barley $ +0 ($315 to $325). Currently trading at a discount to wheat of only $15. This is below the traditional discount of $20 to $25 per tonne.
• Triticale prices $ -2 ($313 to $323). It is unusual for triticale to be trading below the price of feed barley. Is due to most triticale holders in New South Wales and Victoria have stocks bedded down in farm silos until winter.
• Oats prices $ +0 ($290 to $300). Oat pricing is based on imports from the mainland. Graziers there are stocking up on oats ahead of suggestions an El Nino dry spell may be coming later this year.
• The dry conditions have favoured the speed of the grain harvest in the Midlands.

• It’s been a big pasture hay season giving growers the opportunity to re-fill empty haysheds.
• Demand for hay is steady from the dairy sector. There is particular interest in good quality lucerne and oaten hay.
• Lucerne supplies are low and demand is steady. Anyone seeking lucerne hay is advised to secure their requirements now for later in the year.
• The supply of pasture hay is good however quality is variable due to the patchy weather conditions during the hay season.
• Some small quantities of new season straw are now becoming available.