Grain – Hay Report – 23 May 2014

International & National Summary – Grain:

International Markets

• No bullish news since our last report so global wheat prices are down about A$15/t.. Domestic prices have not followed suit with most port prices remaining generally flat, Brisbane and Northern markets being the exception where the dry continues.
• Since January international wheat prices pushed higher by about A$50-60 through a combination of deteriorating US weather conditions and the Ukraine crisis causing ongoing tension in the Black Sea. These risks were priced into the market over March-April and early May. In the past fortnight, the market has assessed these risks as less threatening and downward pressure on international values has seen prices drop about A$20/t – welcome news for end users.
• Conflict between Ukraine and Russia continues to simmer but at this stage export business continues to be written and physical grain flows have been uninterrupted. Any flare up of this situation can easily see grain prices spike again.
• The poor US crop conditions are largely locked in now, although rainfall forecasts for the key winter wheat production regions of Kansas, Oklahoma and Texas (normally account for 50% of US winter wheat) show up to three inches in the next week. If these eventuate it should hold current production estimates and possibly weaken prices a little further. As the US harvest approaches (June/July) the market will get certainty around yield predictions and US harvest pressure could apply downward pressure to the wheat market.

Domestic Markets

• Domestically in the northern markets wheat prices firmed by $5-10 as buyers continue to get some cover and growers remain reluctant sellers given production uncertainty. Tight old season stocks on the east coast are resulting in buyers looking to secure required quantities with aggressive bids.
• It is hard to see much relief in domestic prices on the east coast while the feed grain demand remains strong and the season remains dry for NW NSW and Southern Queensland. This week the “cattle on feed” numbers confirmed a further 8% rise in the last quarter so this demand will stretch through to late 2014.
• Sorghum prices firmed again this week by $6-8 with the discounts to wheat staying over $50. Newcastle zone has rallied strongly in the past two weeks as accumulation for planned shipments is taking place. However prices are not expected to remain supported at current levels when this vessel departs with less end user demand in the Newcastle zone relative to Southern QLD / Northern NSW. Harvested sorghum thus far has been of variable quality due to the dry conditions. The majority of Sorghum is being stored on farm so continue to be vigilant around quality checks.
• In the southern markets the amount of wheat being offered ex farm, particularly in Victoria, has been small causing speculation that there may not be much wheat left on farm. While trade volumes of feed barley have been minimal in the last month reports suggest there is significant volumes still stored on-farm. Once the planting window has concluded (early June) expect more of this to become available, as well as the typical post July 1 sales of old crop stocks..
• Importantly, as winter sets in, dairy farmers should plan their winter feed grain requirements with their suppliers, because the pace of southern exports, together with the continuing dry in the north, mean that supplies are tight till new crop arrives later in 2014.

National Summary – Hay:

• The hay market remains fairly slow this week. Warmer than average temperatures, good availability of paddock feed and an opportunity for buyers to hold off on spending are the main contributors to the slow market.
• Prices remain steady and in most cases unchanged this week. We expect this to continue over the next few weeks.
• A number of regions, particularly in parts of NSW, are starting to comment that follow up rain is needed. If this trend continues, combined with cooling temperatures we expect to see prices and demand increasing.
• Cereal hay growers in WA have had a fantastic start to the growing season with good rain and warm conditions.

Northern Australia:

• Demand for hay has gradually slowed over the past six weeks. The market remains steady this week.
• Conditions are drying out and some areas are still drought declared. We expect to see the demand for hay increase in the coming weeks as we move into winter.
• Supplies of hay in Queensland and NSW are low. Cereal hay can be sourced from SA and Victoria but lucerne supplies are short in most regions.
• There is concern in Northern NSW about water allocations for irrigation later in the year. Low rainfall year to date has resulted in little run off into water storages. Low water allocations could impact the amount of lucerne produced later in 2014 and may see lucerne supplies remaining low for some time through that area.
• In northern NSW the sorghum harvest is still underway. Many growers are taking the opportunity to bale sorghum stubble as a cheap source of fibre. Straw and other alternatives such as cotton trash are difficult to source this year.

Southern Australia:

• The market remains slow this week.
• Buyers are opting to save cash by utilising paddock feed rather than buy hay at present. Demand will not pick up until temperatures cool off and paddock feed is in shorter supply.
• Supplies of cereal hay are good. With demand from northern buyers easing prices have softened slightly in some regions. Prices are likely to remain steady until demand picks up again.
• The market for straw has been steady.

Western Australia:

• Demand for cereal hay from dairy farmers and livestock producers in the South West WA remains steady. Prices are unchanged this week.
• Demand will not start to ease until more paddock feed is available. We expect this to occur in the next few weeks if favourable growing conditions continue.
• Pasture hay is very difficult to source with the 2013 hay harvest mostly used up by now.
• Straw supplies are above average and quality is good.

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 might 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 May rainfall: 7mm (Ave: 11mm).
• YTD: 475mm (Ave: 718mm), compared to 689mm this time last year.
• Patches of decent rains through the Tablelands with heavily varied with falls anywhere between 10-40mm.
• Wheat: $ +8 ($418 to $428). Animal feeds and flour millers have both been competing for the same tonnage since the Central Queensland harvest 8 months ago, as it was all of human consumption quality. Cheaper corn or sorghum is available for feed.
• Barley: $ -2 ($478 to $488). Short supplies are seeing prices pushed even further on the back of demand from end-users requiring the grain in the short term.
• Corn prices $-10 ($345 to $355).
• Sorghum: $ +8 ($343 to $353). Dry weather has allowed the local sorghum harvest to proceed. Much of the grain is still high in moisture. Drying out or frost conditions are still needed to bring the grain into favourable moisture levels.
• Sorghum prices include the freight cost from CQ – not the case with corn.

• Demand for hay remains steady. Weather has favoured contractors this week and baling has resumed.
• Hay supplies are very low. Local supplies will not be replenished for some weeks until the weather settles down for baling.
• Prices remain unchanged this week.

• Toowoomba May Rainfall: 34mm (Ave: 36mm).
• YTD: 255mm (Ave: 360mm), compared to 782mm last year.
• No significant rain on the Downs since our report a fortnight ago.
• Wheat: $ +10 ($389 to $399). Strong exporter buying interest, for packing in shipping containers is driving prices. The majority of this would come from the trade. Some Central Queensland wheat is being bought for this purpose and trucked to the Downs for packing.
• Feed Barley: $ -2 ($364 to $374). Prices easing now. But the price is still too close to that of wheat, well inside the premium that should exist between the two commodities.
• Corn $ -10 ($402 to $412). Not a lot of interest in corn at this time. It’s expensive but the current holders are in this position to punt the market.
• Sorghum: $ +6 ($318 to $328). Sorghum prices have increased $6 over the past two weeks after they took a significant drop in the weeks prior.
• Late sown sorghum crops are still coming off and there will be harvest going well into June. Soybeans are also being stripped but rarely go into feed markets.

• Prices remain steady. Demand is also mostly steady, easing slightly in the past few weeks.
• Although some areas still need follow up rain, most producers now have access to paddock feed for livestock following recent rains. This has eased the demand for hay.
• Local supplies of hay remain low although some f pasture hay (generally low quality) and straw has been baled in the past few weeks. Cereal hay is being sourced from Victoria and South Australia.
• Lucerne hay supplies are very low. Bulk lucerne is very difficult to source. Small squares are getting expensive, trading for over $15/ bale on farm.
• Straw is currently very difficult to source locally and costly to freight from interstate.

• Lismore May rainfall total: 30mm (Ave: 72mm).
• YTD: 398mm (Ave: 670mm), compared to 846mm this time last year.
• Rain was around 5-20mm of rain this past week in the northern rivers area.
• SFW Wheat: $ +14 ($408 to $418). Strong exporter buying interest, for packing in shipping containers. The majority of this would come from the trade. Some Central Queensland wheat being bought for this purpose and trucked to the Downs for packing.
• Feed Barley: $ +4 ($384 to $394). Prices easing now. But the price is still too close to that of wheat, well inside the premium that should exist between the two commodities.
• Corn $ -10 ($362 to $372). Not a lot of interest in corn at this time. It’s expensive but the current holders are in this position to punt the market
• Sorghum: $ +6 ($358 to $368). Sorghum prices have increased $6 over the past two weeks after they took a significant drop in the weeks prior.
• Coastal late summer crops are being stripped.

• Demand remains steady. With some buyers still in, or recovering from drought, there is a focus on sourcing hay and silage in preparation for winter.
• In particular contractors are active, baling hay and straw for growers.
• All hay supplies are low and some buyers continue to source cereal hay from Victoria and South Australia.
• Lucerne hay supplies locally are very low and will not carry through winter. Baling is underway again but the market is still hand to mouth. Demand remains steady and prices firm this week.
• Pasture hay production is still ongoing. Quality is variable. Good pasture hay is difficult to source due to low yields in 2013 and strong demand earlier in the year.
• Straw supplies are low and there is still some baling of sorghum stubble. Buyers are seeking fibre to supplement the green pick.

• Forbes May rainfall: 18mm (Ave: 31mm).
• YTD: 302mm (Ave: 178mm), compared to 177mm this time last year.
• Dry for the past two weeks, but still a brilliant autumn break for cropping in this region.
• SFW Wheat: $ +5 ($280 to $290). Little bulk export activity going on anywhere within NSW at present time.
• F1 Barley: $ -3 ($252 to $262). Feed barley now showing a wide margin below wheat prices.
• Corn $ -5 ($405 to $410). Corn coming off in a number of regions now. Most corn producers aren’t willing sellers. Probably best to look south of Griffith and Darlington Point when sourcing sellers.
• Sorghum $ -12 ($355 to $365). Sorghum crops coming off in the Gunnedah region currently, hence a slight downward pressure on prices. Although there is not a lot about.
• Most growers have gone a long way to completing their sowing programs. Those that remain unfinished are doing so purposely, this allows them to spread their production risk and factor in a late frost.
• Despite the current dry conditions, soils in this region have ample moisture to germinate crops and allow them to establish.

• Local demand has eased, as paddock feed is available. With demand slower prices remain steady.
• All hay supplies in NSW are low. Most hay in sheds is already under contract.
• Cereal hay is in very short supply locally; accordingly there has been some interest in planting oats for hay this year.
• Lucerne hay supplies are low. Growers have some concerns that water availability will impact lucerne hay production later in 2014, especially if an El Niño occurs as predicted. This may see the lucerne hay shortage continuing for some time.
• Small squares of lucerne hay are in short supply and trading for $12-14 on farm.
• Pasture hay is difficult to source and quality is variable.
• Demand for straw has eased after the autumn break but will pick up if the dry weather continues. Straw supplies are low.

• Bega May rainfall total: 7mm (Ave: 48mm).
• YTD: 250mm (Ave: 312mm), compared to 195mm this time last year.
• SFW Wheat $ +5 ($292 to $302). Wheat price up as exporters seek wheat from SNSW to go out of Geelong or Melbourne ports in bulk shipments.
• Feed barley $ -3 ($259 to $269). Discount to wheat out to a large $30/t discount
• Triticale $ +0 ($279 to $289). Holders of triticale are positioning the price against wheat and not barley. Excellent growing conditions of late.
• Oats: $ +0 ($270 to $280). After a price rise three weeks ago, oat prices have remained steady to date.
• With wheat looking expensive, and unlikely to get cheaper, due to exporters remaining active, triticale may prove to be of interest if it trends towards barley.

• After a good autumn break demand for hay has slowed.
• Fodder supplies in NSW are low, with much of the hay still in storage is already under contract.
• Cereal hay prices should remain steady for the coming weeks until temperatures cool off and demand picks up.
• The market for lucerne hay is also steady but supply is low, with very tight supplies forecast throughout winter.
• Demand for straw remains steady and supplies are low.
• Prices remain unchanged and are likely to remain steady over the next few weeks. If the dry weather continues for an extended period or if the temperatures cool off we will start to see an increase in prices.

• Tatura May Rainfall total: 18mm (Avg: 45mm)
• YTD: 167mm (Ave: 182mm), compared to 110mm this time last year.
• Weather conditions remain fine and unseasonably warm with fewer than normal May frosts.
• Wheat: $ +5 ($285 to $295). Exporter interest in Victorian wheat for bulk and container shipments is pushing wheat prices higher, against a lot of contrary forecasts. The problem for dairy farmers is there is no old crop genuine feed grade wheat.
• F1 Barley: $ -3 ($242 to $252). Historically speaking this discount to wheat is outside the traditional range. In the past this spread has closed as the season progresses.
• Triticale: $ +0 ($260 to $270). Triticale in the northeast is being held at this time rather than being offered.
• Feed Oats: $ +5 ($240 to $250). Oats prices on the rise in the last fortnight. There are some concerns about an El Nino in Winter/Spring, which would make oats a good holding crop for growers.
• Since mid January, the wheat price has increased $30/t whilst feed barley price only $21/t.
• Sowing is reported to be finished in this area with much of the crop up and germinating strongly.

• Demand is slow at present.
• Cereal hay supplies are good throughout Northern Victoria. With demand slower prices are starting to show signs of easing this week. On farm prices are coming back, having dropped about $20 this week to $180-$200/t delivered.
• Lucerne hay supplies are low and will remain tight throughout winter. Further price rises are expected when demand picks up in the coming months.
• There are good supplies of straw locally but a large amount is already under contract.
• Prices remain steady this week.

• Sale May rainfall: 12mm (Ave: 52mm).
• YTD: 139mm (Ave: 237mm), compared to 157mm this time last year.
• Gippsland continues to have a standout autumn due to regular rain.
• SFW Wheat: $ +5($319 to $329). Exporter interest in Victorian wheat for bulk and container shipments is pushing wheat prices higher against a lot of contrary forecasts.
• Barley: $ -3 ($284 to $394). The $35 a tonne discount to wheat is not normal and should sit around $20-$25.
• Triticale: $ +0 ($302 to $312). Triticale in the northeast is being held at this time rather than being offered. With a lot of growing feed in the northern areas ahead of the winter for cattle, triticale may need to be priced closer to barley than wheat.
• Feed Oats: $ +5 ($258 to $268). Feed oat prices increased two week ago but not a lot of movement has been seen since. There is plenty of feed in all Victorian districts now but there are concerns about an El Nino in spring, which would make oats hot property.

• Conditions are patchy throughout Gippsland. Some regions have had a good break and demand for fodder is slow. Other regions are drier and are starting to see a slight increase in hay trading.
• Cereal hay and lucerne hay from North Central and Western Victoria are both sought after. Prices remain steady this week.
• Cereal hay supplies are good in Northern and Western Victoria. Although Northern buyers have put some pressure on the market and supplies may become tighter later in the year.
• The supply of lucerne hay is low throughout Victoria and demand remains steady. Vetch is difficult to source and where it can be found quality is variable. Some lucerne silage or haylage is available from producers in Northern Victoria who have just finished their final cut for the year.
• Demand for pasture hay is slow although there is a small amount of trade between farms locally.
• Some straw is available in Gippsland but quality is variable. Gippsland buyers seeking straw are sourcing it from North Central and Western Victoria.

• Port Fairy May rainfall: 54 mm (Ave: 69mm).
• YTD: 242mm (Ave: 224mm), compared to 228mm this time last year.
• The southwest was late getting a seasonal break compared to Gippsland.
• SFW1 Wheat: $ +5 ($280 to $290). Wheat prices are being driven by exporters mainly for bulk shipments but also a number of buyers are taking wheat up country and packing it in containers. With this human consumption buying, animal feeders may need to look at alternative feed grains.
• Feed Barley: $ -3 ($239 to $249). Discount of barley to wheat is still very high compared to past years.
• Triticale $ +0 ($260 to $270). Triticale is being held at this time of year rather than being offered.
• Feed oats $ +5 ($249 to $259). Feed oat prices increased two week ago but not a lot of movement has been seen since. There is plenty of feed in all Victorian districts now but there are concerns about an El Nino in spring, which would make oats hot property.
• The Griffith corn harvest is just finishing with many growers hesitant to sell.

• Demand for hay is slow. Good pasture feed is now available and buyers are opting to utilise pastures rather than buying hay.
• As temperatures start to cool off and pasture growth slows demand for hay will pick up again.
• There are good stocks of cereal hay still available in North Western Victoria but quality is variable. Prices are starting to show signs of easing this week. On farm prices are coming back with prices dropping about $20 this week to $180-$200/t delivered.
• Lucerne hay is still available in small quantities through parts of Northern Victoria and South East South Australia. In general supplies are much lower than usual for this time of year and will be tight through winter.
• Pasture hay is in good supply but quality is variable. Good quality pasture hay for trading may be difficult to source this year.
• Some straw is available locally and quality is variable.

• Mount Gambier May rainfall: 80mm (Ave: 71mm).
• YTD: 233mm (Ave: 213mm), compared to 147mm this time last year.
• It has mainly been fine weather since our report two weeks ago with temperatures around 20 degrees.
• Wheat $ +0 ($304 to $314). Wheat prices are being driven by exporters, mainly for bulk shipments, but also a number of buyers are taking wheat up country and packing it into containers.
• Feed barley $ -2 ($272 to $282). $32 a tonne margin to wheat makes barley the favoured grain use at the moment.
• Triticale $ +0 ($288 to $298). Triticale is being held with prices adjusted at this time, more than the holders (merchants and growers) wanting to make early sales. Expect demand to increase when paddock feed isn’t in such good shape. Holders of triticale expect demand will increase when paddock feed is not as good as it currently is.
• Oats $ +5 ($240 to $250).

• Demand for hay remains steady. There is reasonable paddock feed at present, taking some pressure of the demand for hay.
• Cereal hay supplies are below average locally and quality is variable. Demand is slow at present.
• Demand for lucerne hay is steady at present and supply is low. There is still some interest in lucerne hay from chaff mills and buyers in Northern and Western NSW. Demand will pick up further when temperatures cool off in the coming weeks.
• Pasture hay is available and trading is slow. It is not expected trading will pick up for some weeks
• Straw supplies seem to be diminishing.
• Trade has been steady and prices remain steady.

• Murray Bridge May rainfall: 24mm (Ave: 35mm).
• YTD: 167mm (Ave: 117mm), compared to 59mm this time last year.
• No useful rain since our last report 2 weeks ago.
• Wheat $ +0 ($268 to $278). Wheat prices are down since our review two wees ago.
• Feed barley $ -1 ($256 to $266). Two weeks since our last report barley prices are down slightly, wheat prices more so. The discount of barley to wheat for this dairy region is slim compared to Victoria and southern NSW.
• Triticale $ -5 ($255 to $265). Triticale has to come down in price with minimal local demand.
• Feed Oats $ +5 ($188 to $198).

• Demand for hay on the domestic market is slow at present. With a good start to the season in most of the state buyers are relying on paddock feed rather than purchased hay.
• Hay growers are optimistic about the season ahead with favourable conditions so far. Most will benefit from follow up rain in the coming weeks.
• Cereal hay supplies are good but quality is variable.
• Supplies of protein hay (medic, vetch and lucerne) are low and are expected to be difficult to source later in the year.
• Straw quality has been high and supply is good.
• With trading slow prices remain steady and are expected to do so until demand picks up as temperatures cool off or if there is a prolonged dry period over winter.

• Bunbury May rainfall: 174mm (Ave: 96mm).
• YTD: 201mm (Ave: 165mm), Compared to 199mm this time last year.
• Three weeks ago the southwest got 15-20mm of rain, commencing what all hoped would be a sustained seasonal break. This has proved to be the case with heavy rains in key dairy areas this week.
• Wheat $ +0 ($334 to $344). Steady for the past 4 weeks.
• Barley $ +5 ($300 to $310). Barley prices up over the past two weeks, slightly reducing the large discount to wheat. Exporters are actively bidding for barley from behind all WA ports.
• Triticale $ +5 ($310 to $320). With wheat and barley prices remaining stubbornly high, local stockfeed manufacturers are more interested in the non export grain, triticale. After the recent big rains there is no need for feed oats to be fed to sheep.
• Oats $ +0 ($220 to $230). No need for the feed oats to be fed to sheep any more now that the recent rains in south have brought out natural feed on the non-cropped grazing county.
• Grain growers have now had a series of rainfall enabling seeding, and encouraging more hectares if growers have the areas.

• Hay trading on the domestic market remains steady with cereal hay in demand. Dairy farmers in the South West are the most active buyers.
• Good rain in the past few weeks has benefitted hay growers who are very optimistic about the season so far.
• Supplies of cereal hay are good this year. After lifting slightly last week prices remain steady this week.
• The lucerne hay market is hand to mouth at present and supplies will be tight throughout 2014.
• Straw production was above average this year and supplies are good.
• Pasture hay and silage is very difficult to source due to the lower yields in 2013 and high demand through summer and autumn.

• Smithton May rainfall: 52mm (Ave: 80mm).
• YTD: 254mm (Ave: 264mm), Compared to 217mm this time last year.
• While southern mainland dairy areas have had two weeks of clear days, no rain and 20-degree days Tasmania had similar weather for the first week, but has had a general rain through the north west coast this past week.
• Wheat $ +5 ($362 to $372). Wheat prices are being kept high with exporters bidding for mainland wheat for bulk shipments and for the container trade.
• Feed barley $ +2 ($329 to $339). Wide discount to the wheat price is resulting in minimal barley demand.
• Triticale prices $ +0 ($339 to $349)
• Oats prices $ +7 ($322 to $332). After a strong price rise three weeks ago, prices have remained steady. Situations where sheep are being hand fed oats are rare.

• The hay market remains steady this week.
• Cereal hay supplies are low and quality is variable.
• Lucerne supplies are low and sourcing lucerne hay will be difficult throughout winter.
• The supply of pasture hay is good. Quality is variable due to the patchy weather conditions during the hay season.
• There is some straw available in the Northern midlands. Dairy farmers and feedlots are the most active buyers.
• Prices remain steady and are not likely to change considerably until temperatures drop and demand picks up.