Grain – Hay Report – 27 February 2014

International & National Summary – Grain:

• For the second consecutive week international wheat futures improved, this week supported by continued concern for the condition of the US crop. There has already been reasonable snowmelt in the US and with a forecast cold snap on the way winterkill on dormant crops is causing unease. CBOT wheat futures saw drastic improvements ending the week up A$10/t to close on Tuesday night and A$253/t. The Australian dollar had little impact on prices this week remaining relatively unchanged.
• Recent inclement weather in the northern hemisphere saw the USDA outlook conference peg US and Canadian wheat acreage down from where it was last year. Any current supply estimates are a long way out but with demand remaining strong internationally any news is having an impact on the market. The coming months will see further grain become available on the international market with the northern hemisphere spring on the way and reports Canadian logistics will be fully functioning again following recent restrictions due to the cold weather. With a large quantity of grain hitting the market at once grain prices could potentially face downward pressure in the coming months.
• Despite international values showing vast improvement this week domestic prices have only reflected a small percentage of this change. This exemplifies the Australian basis coming off with predictions we’ve seen the best of Aussie premiums. Many analysts are predicting there is little upside in the Australian basis and Australian values will now be dictated strongly by international market movements.
• The north Australian wheat market is seeing little activity, consequently rallying further as traders drive demand against poor support from growers. Growers are not prepared to lock away new season crop through contracts and end users are reluctant to take more cover hoping for rains to bring down inflated prices. Recent rains through parts of QLD and NSW have been disappointing and done little to subdue the exasperated prices. While the risk of another poor winter crop increases each day expect there to be a significant price drop if weather changes favourably for growers approaching planting.
• In Victoria and NSW wheat markets there remains a significant discount between feed and milling quality grain. Feed grades are trading below traditional price spreads that will close in the coming months. This could represent buying opportunities for remaining old season grain before potential price increases. In SA and WA the gap between the two has already narrowed with feed grades trading at ASW1 values.
• Barley prices across the country continue to find ground despite being expensive relative to wheat. Demand is coming from dual parties with both the export and end user markets sourcing the commodity. The export states of WA and SA rallied $4-$6/mt as buyers continued to be active due to increased Chinese interest for bulk shipments. With fully booked shipping stems for the next two months expect this demand to be maintained in the short term.

National Summary – Hay:

• The demand for fodder is increasing as we head toward autumn. Most notably demand from South West Victoria and Gippsland has picked up in the last few weeks.
• Steady demand from the Northern markets is starting to have an impact on both supply and price of hay in Southern NSW and Northern Victoria.
• We have seen an increase in the demand in WA for high grade cereal hay due to the dry conditions.
• Protein hay supplies will be tight in 2014. Any buyers seeking protein hay for 2014 are encouraged to source their requirements now.

Northern Australia:

• The Atherton Tablelands and South East Queensland are still reporting steady demand for hay. Feedlots are the most active buyers.
• Fodder supplies are low right across Northern Australia. Buyers are now making enquiries in North Central Victoria and South Australia to source hay.
• Updates to the national drought assistance packages announced this week by Tony Abbott and Barnaby Joyce should help farmers in drought affected areas. This could result in increased demand for hay in the coming weeks.
• 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. Anyone feeding drought stressed crops/novel feeds to livestock is encouraged to show due caution, have the hay tested and be wary of issues such as prussic acid or nitrate poisoning.
• 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 continuing to put pressure on prices in the Southern regions. Lucerne hay prices strengthened again in some regions this week. Supply is getting tighter but demand remains steady.
• Demand for cereal hay and protein hay has picked up in to Gippsland and South West Victoria as the season has dried off.
• There is clear indication that supplies of protein hay are going to be tight later in 2014. In key lucerne hay growing regions both high water prices and poor baling conditions, along with steady demand have impacted supply.
• Vetch hay supplies are becoming tight. Quality vetch hay in particular is difficult to source.
• The supply of straw is good at present. Quality is variable, although mostly good.

Western Australia:

• Hay trading volumes are picking up, with interest in high grade cereal hay from the dairy and livestock sectors.
• Lucerne hay is in short supply.
• Low yields were recorded for pasture hay and silage in 2013 therefore hay supplies are down. Buyers are now looking for other hay varieties to meet demand.
• 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: 203mm (Ave: 248.3mm).
• YTD: 256.8mm (Ave: 491.2). This time last year the tablelands had received 491.2mm.
• A solid wet season continues for this region, with 5 consecutive weeks with useful rain.
• Wheat: $ +0 ($385 to $395). All 2013 wheat in central Queensland is of milling quality. It continues to be strongly bid for by exporters.
• Barley: $ +4 ($467 to $477). Barley prices are expensive due to its high freight component and current price premium over central Queensland wheat.
• Corn prices $ +5 ($310 to $320). Corn prices are based on local supplies, where as sorghum is based on central Queensland production and trucked up from that region.
• Sorghum: $ +3 ($347 to $357). Very little sorghum is sown at present. Prepared land for cropping is going to higher valued crops particularly vegetables for the winter market down south.
• January sown summer crops doing well.

• There has been decent rainfall throughout February, easing local demand for hay slightly.
• Demand remains firm from other parts of Queensland. There are also reports this week of hay being sent to Northern NSW.
• Hay supplies are very low due to the strong demand.
• Hay production has now ceased until the drier weather sets in.
• Pasture hay is trading at $280-300/t.

• Toowoomba February Rainfall: 12mm (Ave: 118.6mm).
• YTD: 24mm (Ave: 227.5mm), compared to 594.2mm last year.
• Plenty of photos of wet areas through western Queensland and happy farmers talking about full dams. However for the cropping areas of southern Queensland growers were hoping for 50mm for summer crops. The best got 20mm and many key locations had less than 5mm, which on heavy cracked clays doesn’t change anything.
• Wheat: $ +6 ($361 to $371). Summer rains are needed to provide stored soil moisture for winter crops to mature on. So far, nowhere near enough rain has gone into the deep heavy Downs clay.
• Feed Barley: $ +4 ($353 to $363). Barley prices are up this week, still remaining very expensive.
• Corn $ +5 ($377 to $387). With the rain being very patchy it has left some corn crops still distressed. Reports one crop at Allora was slashed for silage.
• Sorghum: $ +2 ($334 to $344). Some places received 20mm, which was useful for January sown sorghum crops. These should be stripped in second half of April. There is strong importer demand from China.
• Sorghum crop is going to be late and light, and probably light in test weight, as indicated by many farmers and traders.

• Hay supplies are low for all types in South East Queensland. Most hay is being sourced from Southern NSW, Victoria and South Australia to meet demand.
• The good news this week is there has been a rain in Western Queensland which may ease some demand pressure in the next month.
• Competition for hay is starting to pick up in the Southern markets is having an impact on hay prices in Queensland. Cereal hay from the southern states is over $400/t and lucerne hay is over $500/t landed into Southern Queensland.
• There are high numbers of cattle in feedlots, partly driven by low priced cattle from drought affected regions. Feedlots continue to be active buyers.
• There are reports of failed sorghum and maize crops, as well as low grade straw being baled between Southern Queensland down to Central West NSW to meet demand.
• Bulk lucerne hay is in short supply throughout the Darling Downs and is now being sourced as far away as North Central Victoria and South East South Australia. Small squares are still available and trading for around $15/bale on farm.

• Lismore February rainfall total: 20.2mm (Ave: 147.3mm).
• YTD: 104mm (Ave: 319.5mm), compared to 583.8mm this time last year.
• SFW Wheat: $ +6 ($395 to $405). Wheat is already expensive due to all of last season crop being of milling quality. Late summer rains and now patchy rain suggests lower sowings of wheat this autumn and winter.
• Feed Barley: $ +4 ($388 to $398). Feed Barley remains expensive.
• Corn $ +5 ($372 to $382). Some feed corn crops have been slashed and will be baled and bagged for silage, this has been encouraged by the high prices in northern New South Wales and Queensland.
• Sorghum: $ +2 ($352 to $362). Patchy rain through Darling Downs and not enough to encourage a late sowing. The lack of plantings is causing sorghum prices to firm. Some forward sorghum contracts have been washed out, for fear of not making even the minimum test weight.
• Strong demand from China for sorghum remains.

• Conditions are very dry and demand remains strong. Livestock producers, dairy farmers and hobby farmers are all active buyers.
• All hay supplies are low, due to decreased yields and steady demand. Buyers are now sourcing hay from Victoria and South Australia to meet demand.
• Straw supplies are also low. Some growers are now bailing 2013 stubble to meet the demand for roughage from Northern and Western NSW.
• Late season pasture hay production is underway, with even very low quality hay being baled.

• Forbes February rainfall: 39.8mm (Ave: 56.6mm).
• YTD: 64.8mm (Ave: 80.2mm), compared to 96.2mm this time last year.
• Small amount of rain this week, has not been a lot of help. Heavier rains further north, although patchy.
• SFW Wheat: $ +5 ($261 to $271). The price rise this week is export driven. ASW, APW are being transacted through the port of Kembla and Newcastle. Very little wheat of lower grades available.
• F1 Barley: $ 0 ($242 to $252).
• Corn $ +0 ($410 to $420). The patchy rain through the summer rainfall areas has helped to stabilize corn prices. Growers here also have the option to cut scratchy corn crops for hay or silage.
• Sorghum $ +2 ($372 to $382). Rains up north and 17mm locally have put increased yield potential in this years sorghum crops. Expected harvest dates to be second half of April. A light harvest still expected

• 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 and Victoria to meet demand.
• 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.
• 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: 23.6mm (Ave: 98.5mm).
• YTD: 40.6mm (Ave: 150.9mm), compared to 120.4mm this time last year.
• SFW Wheat $ +5 ($275 to $285). This price rise is export driven. Very little low-grade wheat in either Vic or NSW from the recent harvest.
• Feed barley $ +0 ($258 to $268). The prices remain steady as the rain up north although patchy was enough to steady the feed barley market and the hope that additional rains are not far away.
• Triticale $ +5 ($266 to $276). Triticale rise is to preserve its relativity to the feed wheat price. Most growers are still holding it in farm silos hoping for a stronger market in winter.
• Oats: $ +10 ($256 to $266). Oats for this region and for the Monaro are being sources from the southern slopes of NSW and north east Vic.

• The strong demand for cereal hay from Queensland is starting to impact supply in southern NSW. Prices are rising due to the increased competition in the Southern market. Local buyers who purchased early will be well positioned for the season ahead.
• Cereal hay supplies are becoming tight. Prices increased about $20 this week, now trading for around $300-$350/t delivered.
• Supplies of lucerne hay are very 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 for now. Prices are starting to increase, reflecting the tight supply. Lucerne and vetch hay is trading for around $350-$400/t delivered where it can be sourced. Further price rises are expected as demand in the southern market picks up in autumn.
• Supply and quality of new season straw is good. There is steady demand at present from both dairy and livestock and trading is around $150-$180/t delivered.

• Tatura February Rainfall total: 11mm (Avg: 34.2mm)
• YTD: 21mm (Ave: 67.6mm), compared to 10.5mm this time last year.
• No useful rain through northern Vic over the past week. The cooler temperatures have been welcomed and the fire risks have been reduced but nevertheless still present.
• Wheat: $ +5 ($257 to $267). The current demand for wheat is being driven by exporters, some of who would normally be more interested in the higher protein wheat of northern NSW. But the supply and logistics to Newcastle are difficult as movements are restricted by lower tonnages in the hinterland and measures to adjust to a smaller export task for that region.
• F1 Barley: $ +2 ($231 to $241). The exporter interest in feed barley has decreased due to Middle East buyers attempting to buy for larger vessels that can be loaded out of SA and WA ports. Good Vic trade in malting barley.
• Triticale: $ +2 ($250 to $260). Triticale is up on the stronger wheat price. Most triticale is now bedded down for sale to dairy farmers in winter.
• Feed Oats: $ +3 ($210 to $220). Oats are now caught up in the movement of fodder to northern NSW due to the dry conditions.

• Demand for hay from local dairy farmers and feed mills have increased in the past few weeks.
• Increased demand for hay from Northern NSW and QLD means that competition for hay in Northern Victoria is increasing and prices are firming as a result.
• Protein hay (lucerne and vetch) is in fairly tight supply already with much of the hay in storage already under contract. Vetch hay can be sourced from the Wimmera/ Western Victoria although quality is variable.
• Cereal hay remains in good supply but demand is picking up from Northern Australia which will increase competition locally, resulting in increased prices.
• 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: 13.8mm (Ave: 43.3mm).
• Rain this past week was light in east Gippsland but quite heavy in places; Drouin, Warragul and Mirbo North to name a few.
• YTD: 35.8mm (Ave: 88.1mm), compared to 36mm this time last year.
• SFW Wheat: $ +5 ($307 to $317). Wheat prices are strong and are currently being driven by exporters. These exporters are usually more interested in the higher protein wheats of northern NSW but supply and logistics are easier out of Melbourne and SA.
• Barley: $ +8 ($283 to $293). Barley price rise here is a little stronger than elsewhere and its still trading at a discount to wheat.
• Triticale: $ +4 ($297 to $307). Triticale is keeping its price relativity with feed wheat but not many sales are present. Likely to held until the winter market when conditions are colder and wetter as a farm grain silo can only be filled once between one December and the next.
• Feed Oats: $ +6 ($235 to $245). Buying coming from graziers and an increase in demand of Victorian feed oats to go up north for short term use with the current conditions up there.

• Demand for cereal hay has increased, mainly from dairy farmers preparing for autumn calving and building up some fodder reserves for winter. Demand for lucerne and vetch hay also remains strong.
• The supply of lucerne hay is largely hand to mouth at this stage. We expect lucerne hay prices to start to increase in coming weeks as supply tightens further. Vetch is difficult to source, where it can be found quality is variable.
• 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. Gippsland buyers seeking straw are advised to look to North Central and Western Victoria at this stage.
• Prices remain unchanged this week however we expect to see an increase in the near future as prices are picking up in key supply areas like Northern and Central Victoria, particularly for higher grade hay.

• Port Fairy February rainfall: 7mm (Ave: 32.4mm).
• YTD: 26.4mm (Ave: 66mm), compared to 33.4 mm this time last year.
• Light rain of around 10mm has been helpful for farmers in the area.
• SFW1 Wheat: $ +5 ($253 to $263). Demand for wheat is increasing through both the ports of Melbourne and Geelong. The Victorian wheat quality is good, with southwest wheat brighter in colour than for most seasons, a positive from the dry December conditions.
• Feed Barley: $ +2 ($231 to $241). Barley is settling into a price range that is now within the traditional price discount to feed wheat.
• Triticale $ +2 ($247 to $257). Prices up this week on the price rise for wheat. Most triticale holders are not sellers, and won’t be until the cold and wet winter conditions arrive.
• Feed oats $ +3 ($219 to $229). The prices go up again as the demand for feed Northern NSW increases.

• Demand is starting to pick up as the season dries off. Higher grade hay is most strongly sought after.
• There are good stocks of cereal hay still available but quality is variable. Supplies may come under pressure later in the year with ongoing demand from Northern Australia.
• Lucerne hay is becoming harder to source. Prices are now $300-$320/t delivered to South West Victoria. Interest 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 clover hay is also in limited supply.
• Pasture hay is in good supply but variable quality.
• There is plenty of straw available and quality is good, $130-$140/t delivered.
• While prices remain fairly steady this week the market is expected to firm in the coming weeks as demand picks up across Victoria and from interstate.

• Mount Gambier February rainfall: 22mm (Ave: 25mm).
• YTD: 50mm (Ave: 52mm), compared to 22mm this time last year.
• Wheat $ +8 ($276 to $286). Demand for wheat is increasing through both the ports of Melbourne and Geelong.
• Feed barley $ +8 ($256 to $266). Barley is settling into a price range that is now within the traditional price discount to feed wheat.
• Triticale $ +5 ($260 to $270). Prices up this week on the price rise for wheat. Most selling will not occur till the winter conditions arrive.
• Oats $ +3 ($212 to $222). Up again this week as the demand for feed for sheep and cattle for northern New South Wales continues.

• Demand for hay is slowly picking up, typical for this time of year. Buyers are seeking higher grade hay such as lucerne and there is also some demand for straw.
• Enquiries for good quality pasture/clover hay and cereal hay are now starting to come from the drought affected regions in Northern Australia. Generally the supply of quality pasture hay is low.
• Cereal hay is available but quality is variable. Prices remain around $120-140/t on farm. Demand from the north is expected to put pressure on supplies in the southern markets later in the year and prices will increase as a result.
• Demand for lucerne hay is starting to pick up with reports that hay is moving up to Queensland from the Keith region. Locally supplies are lower than average. Demand from outside the region will put pressure on the local market later in the year.
• Lucerne hay prices are already firm. 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: 81mm (Ave: 17mm).
• YTD: 90mm (Ave: 33mm). 26mm this time last year.
• Two weeks since the heavy rains and flash floods.
• Wheat $ +12 ($251 to $261). There was very strong exporter demand for wheat this week with the focus on South Australia. This has sparked wheat price rises throughout the eastern states.
• Feed barley $ +12 ($233 to $243). There is strong exporter demand for feed oats to be shipped to the Middle East out of South Australia and West Australia. This is where most of the barley supplies are sitting and these two states have deep ports that can facilitate larger vessels.
• Triticale $ +10 ($240 to $250). Triticale pricing is adjusting to the wheat price rises. It is unlikely that growers holding triticale in farm silos will offer their grain until winter.
• Feed Oats $ +0 ($183 to $193). There has been some interest in oats for potential export but the grade of feed oat is not an export grade.

• Demand for hay on the domestic market is starting to pick up with some hay moving as far as 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.
• 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 good.
• Prices remain unchanged this week.

• Bunbury February rainfall: 0mm (Ave: 7mm).
• YTD: 0.4mm (Ave: 19mm), Compared to 2mm this time last year.
• It has been six weeks since there has been any rain in this dairy district, which is not an unusual circumstance for mid summer.
• Wheat $ +0 ($295 to $305). There is plenty of wheat flowing in to Perth at these prices, less the road freight from the southwest. The grade of wheat used for pricing is AGP1. Expect some West Australian wheat to be shipped around the coast before September to make up for the low sorghum harvest.
• Feed barley $ +5 ($285 to $295). Strong exporter demand for feed barley to go to Middle Eastern destinations. West Australia is favoured, along with South Australia, as they have the depth at ports to load larger vessels – up to 70,000 tonnes.
• Triticale $ -10 ($265 to $275). Perth buyers of triticale have lowered their buy price and are still receiving all that they want. Triticale is not an export grain.
• Oats $ +10 ($190 to $200). Growers holding oats in store would be keen to hold them against the possibility of a late seasonal break in the south this year.

• Hay trading on the domestic market is increasing with particular interest in high grade cereal hay. Dry conditions over summer are driving the increased demand.
• Cereal hay supplies are good due to high yields in the 2013 season. Buyers should be mindful that feed analysis results are showing variation in quality. Remember to have hay tested before purchasing this year. High grade cereal hay may be difficult to source later in the year.
• 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 above average. Both yields and quality were good this season.
• This week prices remain steady and unchanged.

• Smithton February rainfall: 35mm (Ave: 32mm).
• YTD: 70mm (Ave: 74mm), Compared to 33mm this time last year.
• Three dry weeks now for the north west coast dairy areas.
• Dry conditions and warm weather have helped wheat and barley crops to mature.
• Wheat $ +5 ($335 to $345). Wheat prices were up this week for southern New South Wales, Victoria and South Australia. Stronger bidding by exporters has lifted the domestic prices also. North West Tasmanian wheat crops are now on the turn in colour for potential stripping in mid March.
• Feed barley $ +0 ($315 to $325). Midlands barley continues to be stripped. The low rainfall has provided excellent stripping conditions. Fairly good quality yields.
• Triticale prices $ +10 ($323 to $333). The triticale price range quoted here is from the mainland (Victorian) commodity. In reality most Victorian and New South Wales growers have triticale stored in farm silos and will not be seriously interested in selling until winter.
• Oats prices $ +5 ($295 to $305). There is stronger buying of feed oats in southern New South Wales and extending into Victoria. The oats are being sent to drought affected summer rainfall areas of New South Wales.

• Conditions are drying off and demand has picked up from the dairy sector as a result.
• There is particular interest in good quality lucerne and oaten hay where it can be sourced.
• 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 and some hay is trading. Quality is variable due to the patchy weather conditions during the hay season.
• New season straw is now becoming available with the grass seed harvest now coming to an end.