Grain – Hay Report – 22 August 2013

International & National Summary – Grain:

• There is a big grain crop on the way in northern hemisphere for 2013/14. The risks to this crop are declining by the day and confirms the expectation, but not the guarantee, of lower grain prices over 2013/14.
• The background is:- US winter wheat harvest is almost complete; EU and Black Sea wheat harvests are 70+% complete; the Canadian wheat and canola crops are being revised upwards, to possibly a record; harvest of the US corn crop is about to start; AND, Australian crop prospects so far are average or better (exceptions are North-West NSW and North-Eastern fringes of WA grain belt where crops are very poor). … but we always should wait for our spring to pass before we can count on this crop being in the bin!
• The next price direction signals for 2013/2014 are how planting conditions will shape up in Sep/Oct for the South American corn and soybean crops and the US/EU/Russian winter wheat crops. If that period turns out to be average, then the global supply side of grains into 2014 should look pretty secure.
• Having said that, the market keeps responding to any upside news if a weather problem pops its head up; just like the upward move in oilseed prices this week on the potential of a cold snap or frost damage to the late US soybean and Canadian canola crops. These are risks, but there is no confirmed damage at this point.
• The sliding A$ from above parity to around US0.90cents has kept our local A$ prices about steady over the last few months, despite the decline in US$ values of grain.
• Crops in Australia are on track for average yields or better at this stage (apart from N-W NSW and parts of WA). As always, it will be the spring time weather which really sets the yield.
• Old crop supply of feedgrains remains tight on the east coast of Australia due to strong feedlot demand and an active export program. For that reason, we may not see the full reductions in grain prices on the east coast until our new crop arrives in Nov/Dec. Currently new crop prices are about $5-15 below the old crop prices for the east coast, but closer to $30 below in WA.
• A message out of this is don’t assume supply will be available freely from August-October unless you have had discussions with your feed supplier about your requirements. There may be price spikes in this period if users are caught short.
• For the last week, grain prices were generally down by $5-10, except for Southern Qld / Northern NSW where dry conditions are starting to bite at crop prospects. Prices there for wheat and barley were $5-10 higher.
• The most important issue for dairy farmers is not trying to pick the bottom of the 2013/14 grain market, but to manage their margin-over-feed-cost risk and make a start on covering their forward grain needs if the quoted prices allow them to make a margin, taking into account the 2013/14 milk pricing which has been announced by the milk processors over the last few months.

National Summary – Hay:

• With the fodder season just around the corner demand for hay across the country is starting to slow down. Cash flow is one of the key drivers for decreasing activity in the hay market, particularly in the dairy sector.
• Demand for lucerne hay is very low from all sectors other than the horse and hobby sector. This sector is continuing to demand fodder, supplied in small square bales, thus inflating the price. Despite this, there has largely been a decrease in lucerne prices across the country.
• All regions are indicating that pasture hay supplies are now more or less depleted. Despite strong demand in some regions the product there is very little of it being traded currently seeing prices remain steady.
• Straw is still in demand, particularly in South West Victoria and South Eastern South Australia however is increasingly hard to source. It is mostly being used to supplement high moisture pastures
• The major dairy regions of Victoria, being SW Vic and the Goulburn Valley are seeing a decrease in demand for fodder. Local reserves are low and fodder is typically being sourced from well outside these regions. Suppliers in each of these areas are now saying that they have depleted all of their supplies or were ‘loading the last truck’.
• Many fodder suppliers across the east coast of Australia are now ‘cleaning’ out any reserves in anticipation of the approaching spring. This may offer an opportunity to some buyers.
• Silage production will soon begin in the Goulbourn Valley with paddocks now locked up and producers waiting on suitable drying conditions.
• With good water allocations available for the summer cropping season it is likely that there will a solid fodder growing season in the Goulburn Valley of Victoria. Producers in this region are gearing up to begin doing a first cut of silage or lucerne in the coming weeks.
• Feedlot demand appears to have eased over the past week in Queensland, resulting in a softening of demand for straw.

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.

Notes: Prices are estimates based on delivery to dairy farms with allowance for freight, storage, and marketing costs, but exclusive of GST. Wheat prices are for the relevant stockfeed wheat available in a region (ASW, AGP, SFW1 or FED1) and F1 for barley.

Notes: Hay prices are delivered, GST exclusive based on shedded hay without weather damage, of good quality and colour. It should be noted there is a wide variation in quality for hay, so prices are indicative for a mid-range product.

• Mareeba August rainfall: 0.4mm (Ave: 10.1mm).
• YTD: 711mm (Ave: 742.5). Rainfall for this time last year was 816mm.
• Clear blue skies across the tablelands, nice warm weather but no rain. Typical later winter weather.
• Excellent growing conditions, where forage crops have soil moisture.
• Wheat: $ +7 ($372 to $382). Still all milling grade until 13/14 starts to come through. Not necessary to purchase milling quality wheat when sorghum and corn are still in abundance. Corn does have less appeal in the warmer months.
• Barley: $ +14 ($415 to $425). Prices are bouncing around a bit. Very low supplies SE QLD. Too expensive for use with the freight component this far north.
• Corn prices $ -5 ($383 to $393). Has a place at this small premium over wheat. Any local feed, even milling corn may prove cheaper on a landed cost basis.
• Sorghum: $ -5 ($340 to $350). Still competitive if there’s no local grain available.
• Prices are beginning to firm as new crop wheat approaches maturity. It is expected to be high protein milling quality.
• At least early in the harvest before any heavy rains have impacted on the quality, in the meantime sorghum has the edge if grain needs to be trucked to the tablelands.

• Currently seeing very low volumes of fodder traded in the Atherton tablelands.
• Growers in the region are now preparing for the dry season ahead, taking advantage of good baling weather in the past few weeks to conserve and store fodder. It is anticipated that the strong demand won’t ease in the short term.
• How long the high demand continues will depend on how many livestock station owners can afford to keep. The ability to pay for fodder to feed cattle will play a key role in this decision.
• Rhodes grass Hay – Steady- ($265-$285): Supplies of hay are lower than usual, after a dry wet season; however the quality is good as baling conditions have been favourable.

• Toowoomba August Rainfall: 5mm (Ave: 34.5mm).
• YTD: 899mm (Ave: 460.7mm), compared to 470.2mm this time last year.
• No rain in southern Queensland this week.
• Wheat: $ +7 ($318 to $328). Wheat is scarce on the Downs. All quality in the area is asw1 and above, which clearly comes with a premium.
• Feed Barley: $ +14 ($340 to $350). Just a few small parcels coming forward from local sources. Otherwise the closest source is the Moree area of NSW.
• Corn $ -5 ($335 to $345). Buyers are more interested in sorghum than corn so the margin has narrowed to $38
• Sorghum: $ +10 ($297 to $307). Higher as the late sown crops finally have been reaped. No out of paddock buying anymore. Better markets here than in CQ.
• Central, northern and eastern Downs have reasonable yield prospects, helped by the quality of the soils and the ability to put down roots to a metre, to help maturing crops with additional water.
• Secondly Western Downs, with poorer soils and less rain during the 2013 growing season. Yields will be below average even if heavy rains are received before crops dry off.
• Lower grain prices for incoming crops to dairy farmers will depend on weather damage wheat, which would impact on feed barley prices locally.

• While there are reports of some early crops being cut for both hay and silage the majority of the new season hay will become available as early as late August to early September as the conditions become suited to curing hay.
• Cereal hay is in particularly short supply nationally and is being freighted big distances to meet local needs. However slightly weaker demand resulting in a drop of $20/T on last week.
• There is very little lucerne hay being traded in the region with the main buyers of any volume being the horse sector. The nearing of the new season and reduced demand resulted in a significant drop of $60/T for lucerne when supplied in bulk, with small square bales remaining steady. New season lucerne should become available as early as September.
• Pasture hay has been extremely hard to source in the Darling Downs. Accordingly there has been limited trade and no indication of change in the current price for the small volumes being traded.

• Lismore August rainfall total: 2mm (Ave: 47.7mm).
• YTD: 1024mm (Ave: 871mm), compared to 950mm this time last year.
• NO rain this week for the north coast or the mid-north. Temperatures have begun to rise to the mid 20’s.
• SFW Wheat: $ +7 ($371 to $381). Wheat supplies out of western SE QLD and west of Moree in NSW are tight for old crop, coupled with low prospects for incoming crops.
• Feed Barley: $ +15 ($386 to $396). Not useful or efficient, at any price above wheat.
• Corn $ +0 ($390 to $400). Steady, any locally produced feed corn will be cheaper than the prices in our price band.
• Sorghum: $ +10 ($314 to $324). Cheapest feed grain if brought down from the Downs or from L-Plains.
• Dryland paddocks are still ok but irrigation paddocks being prepared for sowing for summer crops. Ryegrass is still productive.
• Concerns for feed grain supplies of new winter crop harvest in SW QLD and Nth West NSW.

• The region is still very damp after one of the wettest years on record. Pasture growth has slowed and some buyers are looking to purchased fodder for supplementary feeding.
• Over the past few weeks demand has started to firm up and prices have increased. Pasture hay is in highest demand and saw a slight price rise this week.
• Due to the hay season about to start at the end of August to early September there was a slight softening of demand for cereal and lucerne hay with prices steady to down $30/T for each of these.
• Pasture hay has been in very limited supply for many months and prices have not changed over the past week.

• Forbes August rainfall: 19mm (Ave: 38.2mm).
• YTD: 383mm (Ave: 302.2mm), compared to 505mm this time last year.
• Rains this week were recorded at 5mm. Rains will be required through Sep to maintain yield forecasts.
• SFW Wheat: $ -2 ($243 to $253). Supplies of old crop wheat in central and northern NSW are lower going into the final quarter of the export year.
• F1 Barley: $ -5 ($229 to $239). Barley supplies through to new crop are comfortable in central west, incoming barley prospects bright.
• Corn $ -5 ($365 to $375). Low buying interest from domestic stock feed manufacturers at this time.
• Sorghum $ +5 ($323 to $333). Sorghum higher as it will have stronger position in Nth NSW this coming summer with less grain out of Nth West NSW.
• Feed grain prices should retreat some $30 a tonne before the next winter crops harvest locally. Probably not the time to forward price, expected grain usage this is uncovered through to Christmas.

• Demand for fodder is beginning to decline as pasture growth increases.
• Many fodder suppliers are cleaning stocks in preparation for the new seasons hay coming in. This may present opportunities for buyers.
• Demand for fodder is steady through the central west but supply is limited. The key buyers are hobby farmers and chaff mills. Bulk hay, particularly of lucerne in big squares is now in very short supply.
• Most classes of fodder are steady in price compared to the last report, with an indication that lucerne may have actually increased in price slightly by $20/T. The increase in the price for lucerne is being heavily driven by an increase in the price of small bales, driven by the horse and hobby industry.

• Bega August rainfall total: 3mm (Ave: 30.6mm).
• YTD: 346mm (Ave: 440mm), compared to 669mm this time last year.
• No rain again this week, making August a dry month for this dairy region.
• More rain is needed on hill paddocks over the next six weeks if there is to be any fodder conservation on the hill paddocks this year.
• SFW Wheat $ -2 ($269 to $279). The popular choice for cow feeding through winter. Conditions still cool through the Bega Valley and nearby dairy areas.
• Feed barley $ -7 ($244 to $254). Feed barley supplies from old crop is plentiful in the south and Vic. Incoming barley prospects very good, exporter bids easing back with more barley supplies out of the Black Sea Region.
• Triticale $ -5 ($256 to $266). Probably heading down the same path as what the barley price has, should bottom out around mid December when harvest concludes in the south.
• Oats: $ -15 ($263 to $273). Although conditions are still cold on the Monaro, in other southern NSW areas the feed is growing strongly, sheep & cattle no longer needing energy supplements.
• More wheat than barley going into home mixes now. $25 a tonne discount for barley will encourage more farmers to switch to barley in late Sep when there is more energy coming from pasture.
• Old crop triticale prices are expected to settle pre harvest not far above feed barley numbers.

• Fodder to the Bega Valley is coming from Central West NSW, the Southern Tablelands and the Riverina and is in very short supply. Demand has started to slow largely due to the high prices for hay.
• the past week saw cereal and lucerne fodder prices reduce by $20/T with straw and pasture remaining steady. This can be attributed to a decrease in demand, the approaching spring growing season and a growing reluctance of dairy farmers to continue to pay high prices for fodder,
• Pasture hay is extremely low in supply with many suppliers indicating that they have sold out many months ago.

• Tatura August Rainfall total: 27mm (Avg: 64mm)
• YTD: 290mm (Ave: 323mm), compared to 396mm this time last year.
• Most irrigated areas of Nth Vic has five to ten mm of rain this week, it was welcomed.
• Wheat: $ -1 ($279 to $289). Wheat price relatively flat this week but should come back a bit before the 13/14 harvest kicks off. If wet weather at harvest causes wheat sprouting then it will loose it’s appeal for human consumption.
• F1 Barley: $ -10 ($244 to $254). Exporter interest in barley for most areas in Australia has declined. Due to commodity availability out of the Black Sea region.
• Triticale: $ -5 ($260 to $270). Triticale needs to be closer to the barley price to sell at this time. Holders are wanting to quit before new season starts to get delivered, this will put harvest pressures on 13/14 prices and cause it to fall around $30 a tonne.
• Feed Oats: $ -15 ($220 to $230). Big drop in the demand for oats for sheep. Still demand for oats for horses in and around Strathbogie, these oats however are much heavier than the quality that is fed to sheep and cattle.

• Fodder trading slowing now as more winter and early spring feed becomes available. Prices are now beginning to soften for most categories.
• Some early cut silage will begin in the next fortnight.
• Any fodder that is being traded in the region is coming from North Central Victoria, SW NSW or NW Vic. Local supplies are depleted.
• Cereal hay is trading up to $30 lower than last week, and lucerne hay is trading up to $50 lower than last week. This reflects the lower demand and decreasing quality of the remaining supplies.
• Sale August rainfall: 28.2mm (Ave: 46mm).
• YTD: 381.4mm (Ave: 370.9mm), compared to 446.7mm this time last year.
• Conditions are very wet, but less so in east Gippsland and through the Strzelecki Ranges where slopes help to shed excess surface water. Few dry areas left for cows to feed and shelter.
• SFW Wheat: $ +0 ($312 to $322). Wheat prices remained steady over the last week but are expected to drop further before the Victorian harvest commences.
• Barley: $ -10 ($286 to $296). Domestic demand for feed barley remains slow with increased competition from Black Sea barley exporters
• Triticale: $ -5 ($297 to $307). Currently needs to be closer to the barley price to have buying appeal.
• Feed Oats: $ -10 ($225 to $235). Fewer oats now being used on sheep anywhere in South Eastern Australia. There may be a role for some oats in the feed cart in addition to the planned grain ration to help cows cope with cold wet and windy weather and consequent chill factor.

• Some farmers using feed carts to bring feed to cows, and using the internal roads and crush rocked laneways instead of paddock feeding.
• More grass growing, farmers are able to alter cow-grazing rotations to allow some paddocks to locked up already foe silage and maybe hay production.

• Demand for fodder has decreased considerably across the region.
• There are marked differences in prices being paid from east to western Gippsland with differences up to $100/T for the same product (driven by freight costs).
• There is very little lucerne being traded, partly driven by cost and dairy farmers have ample green grass for livestock.
• Cereal Hay has fallen $50/T on last week.
• There remains steady demand for straw, however prices appear to have fallen slightly on last week by $10/T.
• Pasture hay is in demand for use by dairy farmers as a high quality roughage source. It appears that some of the softening demand for straw has been replaced by an increased demand for pasture hay with an increase in price of $30/T

• · Port Fairy August rainfall: 167.2mm (Ave: 90.4mm).
• · YTD: 617.8mm (Ave: 491.9mm), compared to 539mm this time last year.
• · Still very wet in this area, with a lot of rain coming in this month already.
• · SFW1 Wheat: $ +0 ($281 to $291). Wheat prices are holding at the moment but should drop around $30 a tonne or more before the new season Victorian wheat harvest begins.
• · Feed Barley: $ +0 ($253 to $263). Exporter interest is lower with more competition coming from the Black Sea barley exports.
• · Triticale prices $ +0 ($270 to $280). With incoming crop prospects good, grower holders of triticale are keen sellers. They still represent good buying if they can be found cheap enough.
• · Feed oat $ -15 ($206 to $216) Fewer oats now being used on sheep anywhere in SE Australia. Good prospects for incoming crops.
• · Incoming western Victorian crops are doing very well at the moment.
• · The area is extremely wet with flood warnings for lower reaches of the Glenelg and Hopkins rivers. Once the region dries out the feed situation will improve dramatically.

• Demand for fodder is slowing now with some more pasture and winter feed becoming available for grazing. Lack of cash flow is also a prominent factor in the buyer’s ability to pay for fodder.
• Prices remain steady to slightly lower for cereal hay, down $10/T.
• Cereal hay isn’t available in large quantities but supplies are still available from some of the key traders and exporters.
• There is very little demand for lucerne hay due to the increasing amounts of high quality pasture available across the region. Its also worth noting that lucerne supplies are extremely low, with any stocks coming from SE SA or North Central Victoria.
• Pasture hay is now mostly unavailable. Any producers with supply will have locked in supply and price many months ago thus there is no change in pasture hay prices, despite significant demand and reduced supply.

• Mount Gambier August rainfall: 149.8mm (Ave: 95.4mm).
• YTD: 535.6mm (Ave: 491.4mm), compared to 483.6mm this time last year.
• Mount Gambier received another 50mm with conditions remaining extremely wet.
• Wheat $ +0 ($280 to $290). Wheat prices are currently cheaper for exporters out of Port Adelaide than Portland or Geelong. Subsequently there is an increases demand for wheat out of South Australian silos. Despite this prices remain steady as wheat remains the preferred grain to feed in the cold conditions.
• Feed barley $ -7 ($264 to $274). Demand for feed barley is still low, as cows require the extra energy from wheat. Still needs to go lower to find an economic inclusion in home mixes during late winter.
• Triticale $ -5 ($260 to $270). Triticale is worth buying when cheaper than Barley. At this stage of the year there seems to be only small parcels available.
• Oat prices $ -10 ($200 to $210) Most of the sheep areas have enough new feed that they do not currently need any grain oat supplements. Price drop is being driven by the lack of demand.
• Low areas surrounding Mount Gambier and Millicent are unable to drain freely and may remain for some months.
• Incoming crops in western Victoria and southeast South Australia as well as the Murray Mallee are improving with June and July rains. Growers are hoping the wet winter will harbour a wet spring and a good finish.
• SA June milk production was down an enormous 13.9 per cent on the June 2012 figures.
• Pasture growth responses are still slow due to the cold conditions of present.

• The emerging hay season appears to be promising with good soil moisture and as the days warm up, pasture and crop growth is increasing.
• Demand for all categories of fodder has slowed significantly. However as supply is also very low there is no significant change in price for any category.
• There is no lucerne being traded in the region at all, with the exception of in small squares to the horse and hobby trade, the price for which remains steady.

• Murray Bridge August rainfall: 25.2mm (Ave: 36.5mm).
• YTD: 268.7mm (Ave: 226.5mm). 347.5mm this time last year.
• South Australian crops are looking really good as grain growers continue to become more confident in this years incoming crop. County Light had 25 millimetres, Parawa 56 millimetres and Murray Bridge a more modest 6 millimetres.
• Wheat $ +10 ($281 to $291). Price rise is a result of firm exporter bidding not domestic buyer sales.
• Feed barley $ -5 ($261 to $271). Not a strong demand as exporters meet competition from Black Sea’s grain exports.
• Triticale $ -5 ($255 to $265). Triticale is following wheat down at the moment. Incoming prospects for all crops are good and improving, hence the need to quit old crop stocks ahead of a new harvest. Only very small parcels available currently.
• Feed oats $ -10 ($193 to $203). Less sheep demand currently for oats with paddock feed increasing.
• SA June milk production was down a massive 13.9 per cent on June 2012 litres.
• Crops are early this year and pastures growth rates are strong for August.
• Expect some easing of grain prices from current prompt purchase prices to incoming forward price bids.

• Hay supplies are low but traders are still getting enquiries. The biggest demand is coming out of the Victorian dairy regions.
• Prices remain have reduced slightly over the last week with cereal hay and lucerne reducing in prices by $20/T.
• Straw prices remain unchanged. Any straw on farm is likely to be under contract but demand from the domestic market is fairly quiet at this stage.
• Pasture hay stocks are low and the price remains unchanged this week. Any reserves that remain on farm are largely under contract or not for sale.

• Bunbury August rainfall: 68.8mm (Ave: 115.7mm).
• YTD 503.0mm (Ave: 573.8mm), compared to 464.0mm this time last year.
• Rain through south west this week with Busselton receiving 19 millimetres, and Harvey 38 millimetres
• Wheat: $ -5 ($307 to $317). Wheat remains the desired commodity in the colder conditions. Prices lower as August rains through at least western wheat areas, ensures their incoming season. Still below average yields expected for many areas.
• Feed barley $ +0 ($272 to $282). There is the expectation feed grain prices will drop significantly as harvest approaches despite poor yield prospects within WA. Not as strong demand as exporters from Black Sea’s grain exporters.
• Triticale $ -5 ($265 to $275). Triticale is following wheat down. Despite supplies remaining low triticale is not making any more than feed barley currently.
• Oats +0 ($180 to $190). Less demand for oats as it is no longer needed for sheep feed. Sheep are instead being put into vetch crops in many places reducing the need for oats.
• June 2013 milk production was up 4.8 per cent on the June 2012 litres.
• In view of the low state crop last year, many of the larger domestic users of feed grain have mainly bought their expected tonnage requirements through to the next harvest. Therefore purchases are only opportunistic now and for the months ahead.
• Dairy pastures are now grazing strongly.

• Fodder producers in the key hay growing regions have had a good start to the season so far and are expecting good yields coming into this year’s harvest.
• Demand for hay is steady on the domestic market; WA hasn’t experienced the spike in demand from the domestic market as seen in other states.
• Parts of WA, particularly the eastern wheat belt have dried off quickly which could compromise their fodder harvest for 2013.
• Cereal hay prices have decreased this week, indicating a market correction to the slight increase experienced last week. Cereal hay prices are down by $30/T.
• Interest from the feedlotting industry is impacting on the demand for straw.

• Smithton August rainfall: 225.2mm (Ave: 119.9mm).
• YTD: 645.2mm (Ave: 594.9mm), compared to 615.6mm this time last year.
• Another 60 to 90 millimetres of rain this past week on North West coast.
• Wheat $ +0 ($360 to $370). Wheat prices have not moved over the past two weeks. Feed consumption is currently low, as many cows have been dried off. The expected trend is lower prices in the coming months leading into the harvest period.
• Feed barley $ -5 ($340 to $350). Barley prices are easing at the moment with exporters showing more interest in new crop purchases at present. Currently at a $20 discount to feed wheat and expected to widen out to $25 over the coming weeks.
• Triticale prices $ -5 ($353 to $363). Needs to be cheaper relative to wheat to attract buyers.
• Oats prices $-10 ($293 to $303). With enough natural feed available the demand for oats is considerably less.
• June milk production was almost steady when compared to the previous year down 0.9 per cent.
• Creeks and rivers all running fast as the region tries to shed the excess water to the sea. King Island also had heavy rain with Naracoopa receiving 68 millimetres
• The region is extremely wet at the moment with little tractor work possible. Winter paddock feed is still strong as the paddocks take time to drain.

• Prices for fodder remain unchanged in Tasmania, with demand remaining strong, and supplies limited.
• There is very little pasture hay available or being traded.
• All categories of fodder remain unchanged.