Grain – Hay Report – 27 September 2013

International & National Summary – Grain:

• This week saw a see sawing market as the CBOT digested the US federal reserve’s decision not to reduce their stimulus spending. This decision boosted confidence in investment markets and saw speculators increase their appetite for risk. Funds were encouraged to move out of safe investments like equities and into commodities leading to the increased volatility we saw in the commodities markets this week. CBOT December futures ended the week up 12.25 USc/bu to close Monday night at 653.50 USc/bu.
• The Australian dollar continues to find strength posting further gains this week of 1.28c against the US dollar to close on Monday night at 94.41 USc. The current surge in the dollar is being driven by US monetary policy. For most of the year the drop in our dollar against all other currencies has been valuable for our export industries, including the grain industry. As long as the US dollar continues to move up and down against every currency the impact on the A$ value of US wheat futures will be close to zero. This will allow us to hold onto the boost of $20 to $25 boost we received from the falling dollar throughout the last 3 months.
• Strong buyers of wheat over the last month including Egypt have been purchasing wheat of Black Sea origin, as it has been consistently cheaper than the rest of the world. In a positive turn of events for Australian export markets leading into harvest Egypt have indicated significant quality concerns over their Black Sea purchases and may seek alternative sources.
• Domestically old season crops trade is sparse at the moment as focus turns to new season crop as it begins to roll in off the header in central Queensland. There is the potential for further downside in the market as new season grain begins to relieve the current supply shortage. On farm storage seems to be where the majority of domestic trade is occurring. Be careful in checking quality out of private storage before purchasing and feeding to livestock.
• Despite what is trending to be a falling market coming into the harvest period expect to see strong export demand for Australian grain again this year. Shipping slots are already heavily booked for the new season. National production is estimated to increase from last year, but not too the extent the being indicated by export demand.

National Summary – Hay:

• Prices remain largely unchanged this week due to the limited amount of hay being traded across most of the country. With slow hay trading, prices are speculative and difficult to accurately report, as is traditional at this time of year.
• As growers start to consider their marketing options for hay in 2013/2014 it is a good time for all buyers to lock in prices for new season fodder. Given the lack of carry over hay from 2013 and the increasing demand for purchased fodder from the dairy industry it is not unlikely that demand for hay will remain strong throughout 2014.
• Early indications suggest that export cereal hay prices for 2013/2014 will be similar to 2012/2013 depending on quality. Traditionally export hay sets the floor price for cereal hay traded on the domestic market and with big yields expected new season hay is becoming available at a lower price.
• Reports from around the country indicate that most of the key hay growing regions will see average yields in 2013. However, contractors in some regions are concerned that cash flow could restrict the amount of fodder conserved by growers in some regions. For growers who intend to cut back their fodder conservation and buy in more fodder this season it is important that they start to have conversations with their hay suppliers now in order to secure supply.
• The silage season has commenced in Gippsland and Northern Victoria and yields are reported to be average.
• Growers in South East South Australia and South Western Victoria are starting to lock up paddocks for their silage season set to commence in October.
• 60% of Queensland now drought declared and there is active hay trading in Northern NSW and Southern Queensland. Frosted cereal crops cut early for hay and cereal hay presently being cut on the Darling Downs are quickly being absorbed by the beef industry.
• Chaff mills, particularly in Central West NSW are struggling to source premium grade bulk hay, either cereal or Lucerne hay.

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 September rainfall: 8mm (Ave: 4.2mm).
• 17mm of rain this week, which will be very useful for tropical, pasture paddocks.
• YTD: 719mm (Ave: 747).
• Wheat: $ -20 ($342 to $352). The drop in wheat caused by new CQ wheat harvest in progress.
• Barley: $ -10 ($397 to $407). Only a small quantity available in new crop supplies.
• Corn prices $ -5 ($398 to $408). A further drop in price but still uncompetitive for purchase as a feed grain.
• Sorghum: $ -12 ($303 to $313). Price of sorghum coming down considerably following the implementation of the CQ harvest. Sorghum still has a key place in feed rations while new season wheat continues to grade well.
• CQ wheat harvest has well and truly commenced. All wheat so far of human consumption categories, mostly AUH2 and H2. We have probably not seen the end of the grain prices slump.
• Any off-grade wheat that has been stripped wouldn’t necessarily be cheaper. Would expect many growers to leave their feed quality paddocks to be harvested later in the season.

• There is a shortage of hay on the Atherton Tableland and demand remains strong from cattle stations.
• The quality of hay made in 2013 was excellent, however very little of this quality hay is still available.
• The hay shortage is likely to continue in 2014 as the demand for Rhodes grass seed declines. Anyone with a reliance on purchased fodder will need to lock in their supply early in the 2014 baling season.
• Prices remain steady- ($265-$285) this week. Although demand is strong the quality of hay that is now available is fairly low, this seems to be the main factor preventing the price from increasing.

• Toowoomba September Rainfall: 16.8mm (Ave: 38.4mm).
• YTD: 916.2mm (Ave: 499mm), compared to 503.6mm this time last year.
• Dry weather this week as the crops mature nicely for an expected harvest kick off around mid-October.
• Wheat: $ +0 ($301 to $311). Wheat coming in from CQ straight out of the paddocks on road trains at the moment, steadying prices until the darling downs harvest gets underway.
• Feed Barley: $ -11 ($312 to $322). The decline in barley prices is on the back of wheat trading activities.
• Corn $ -10 ($335 to $345). Down this week as very little trade occurs in the market.
• Sorghum: $ -24 ($268 to $378). Following the wheat price lower to remain competitive in domestic markets.
• Queensland milk production down 4.3 per cent on August 2012 derivatives.
• Best to wait until the harvest is underway before pricing grain requirements for the 2013 season.
• Weather damaged wheat if it is at all available will not be seen until the end of a delayed and wet harvest.

• With 60% of Queensland drought declared there is strong demand for fodder from stations weaning cattle and from feedlots. The horse industry is also actively purchasing hay.
• Cereal hay production has commenced on the Downs and quality is expected to be good due to favourable curing conditions.
• Lucerne hay in bulk is hard to source but there are still active buyers in the premium market being the horse sector and the chaff mills are paying top dollar.
• Pasture hay is 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 September rainfall total: 36.6mm (Ave: 41mm).
• YTD: 1060mm (Ave: 912mm), compared to 961mm this time last year.
• No rain this week in the northern rivers nor the mid north coast.
• SFW Wheat: $ -5 ($347 to $357). Wheat has come down following a late reaction to recently harvested milling wheat entering the market from CQ.
• Feed Barley: $ -5 ($366 to $376). Barley prices followed wheat movements.
• Corn $ -5 ($380 to $390). Traders are holding corn prices waiting till grain markets show more stability
• Sorghum: $ -5 ($307 to $317). Should be some local sowings of both rain sorghum and forage sorghum on the rain this week in dry land paddocks.
• Expecting wheat prices to ease back from current prices when new western Downs wheat and barley crops come off in mid-October period.
• Opportunity in the coming weeks to see summer crops seeded.
• Monitor and new local sowing of grain sorghum or feed corn.

• Baling has commenced for some early cereal and vetch hay crops. Conditions have been favourable for growers and the quality is good.
• There is steady demand for new season hay from the beef and dairy sectors as old season hay is in short supply.
• Supplies of all fodder types are limited and will remain tight until new season baling commences in earnest in the next 4-6 weeks. Early indications are that prices will start to ease when new season fodder is more readily available.
• Prices remain largely unchanged this week, due to the continuing steady demand. The exception is Lucerne hay which dropped $50 this week, likely a result of some first cut lucerne hay and new season vetch coming onto the market.

• Forbes September rainfall: 53.6mm (Ave: 41.4mm).
• YTD: 437mm (Ave: 344mm), compared to 515mm this time last year.
• Incoming crop production is now back on track after solid rains through the Central West last week.
• SFW Wheat: $ -10 ($220 to $230). Exporters have averted their interest to new season crop that will become available and using these to secure shipping stem slots after harvest.
• F1 Barley: $ -5 ($196 to $206). Barley has gone back to the traditional discount range to wheat. Old crop supplies are still available but are quickly losing value, as new crop barley supply looms large.
• Corn $ -10 ($370 to $380). Traders are holding old season stock to await developments around the new wheat harvest.
• Sorghum $ +8 ($319 to $329). Not very competitive at these prices against local wheat and barley.
• General rain has consolidated the crop right through South Australia and eastern Australia. Hence further downward pressure on grain prices exacerbating impact of higher valued Australian dollar, and high grain trading activity out of Black Sea ports.
• Old crop supply is adequate within this region in direct contrast to northern NSW.

• Demand for fodder is steady and many fodder suppliers are cleaning out stocks in preparation for the new seasons hay. The main buyers are from the livestock industry and are seeking lower grade hay.
• Recent rain was welcomed by growers and will give cereal hay crops a boost after they dried out quickly in late August.
• Cereal hay prices eased approximately $80 last week, as growers and buyers started to negotiate new season prices. This week due to the lack of hay available for trading and lower demand, prices for all fodder categories remain unchanged.

• Bega September rainfall total: 107.4mm (Ave: 31.2mm).
• YTD: 459mm (Ave: 471mm), compared to 689mm this time last year.
• No rain this week, but none needed after the four inches received the previous week.
• SFW Wheat $ -18 ($238 to $248). Wheat supplies from old crop are quire adequate for domestic demand in central and southern NSW. Line ball at the moment in price between wheat and barley for home dairy mixes.
• Feed barley $ -5 ($223 to $233) Feed barley now back within normal discount range to wheat, using historical price tables.
• Triticale $ -10 ($231 to $241). Very little old season stock available at the moment.
• Oats: $ -10 ($228 to $238). Too much feed through southern NSW for any interest in grain oats for grazing animals.
• Summer crop activities are not yet running, thus saving feed on hill blocks for later or for fodder.
• Great growing conditions ahead on the ryegrass hill paddocks.

• Demand for all fodder categories has slowed as spring feed becomes available.
• Reports indicate that prices for cereal hay remain steady and there is some trading, mostly from growers who are clearing out 2012/2013 season fodder in preparation for the new seasons crop.
• Reported trading of Lucerne hay into the region indicated the market remains steady at around $300t delivered to Bega. It should be noted that there are very limited stocks of lucerne hay available for trading.
• Growers are starting to consider their marketing options for new season fodder. With limited carry over and an increased reliance on purchased fodder from the dairy industry, buyers are encouraged to consider their requirements for the year ahead.
• Pasture hay is extremely low in supply with many suppliers indicating that they have sold out many months ago.

• Tatura September Rainfall total: 21.2mm (Avg: 43.5mm)
• YTD: 292mm (Ave: 366mm), compared to 432.9mm this time last year.
• 45mm and more over the previous week has set up the dairy pastures for spring flush of growth.
• Wheat: $ +0 ($273 to $283). Exporters are still interested in bidding for old crop wheat.
• F1 Barley: $-3 ($216 to $226). Massive discount to wheat currently and representing good buying opportunity.
• Triticale: $ +1 ($258 to $268) No longer readily available. Good buying at any discount to a genuine feed wheat price. Feed Oats: $ -10 ($180 to $190). No interest in feed oats for grazing animals.
• Cereal crops at least at flag leaf stage, with most barely crops flowering.
• Summer crops of forage sorghum and forage cornrow crops are being planned.

• Silage has commenced and good yields are being recorded.
• Cereal hay growers are optimistic they will see good yields this year.
• Fodder trading is slow as early spring feed is now readily available. Prices remain unchanged this week.

• Sale September rainfall: 49.8mm (Ave: 52mm).
• YTD: 441mm (Ave: 423mm), compared to 483mm this time last year.
• SFW Wheat: $ -3 ($305 to $315) Wheat prices continue to slip lower as new season harvest approaches.
• Barley: $ -4 ($257 to $267). $47 At a massive discount to wheat making barley a must for spring cow feeding.
• Triticale: $ +1 ($288 to $298). Very little old crop commodity on offer.
• Feed Oats: $ +0 ($205 to $215). Feed everywhere. No need for oats for grazing animals. Market now poultry and horses.
• With low amounts of grain now trading throughout Gippsland further price slippage can be expected as traders attempt to quit old season stock ahead of the new November harvest.
• Strong emphasis on pasture management to enable grazing on consistently high quality pasture.

• Demand for fodder remains slow but steady, with cereal hay and straw bringing the most interest.
• Early silage production has commenced in some parts of the region, good yields and quality are being reported so far.
• With good spring growth and a lack of carry over fodder from 2012, there will be a lot of interest in fodder conservation in 2013.
• Fodder prices remain unchanged this week due to the slow trading.

• Port Fairy September rainfall: 68.2mm (Ave: 72.9mm).
• YTD: 702mm (Ave: 565mm), compared to 613mm this time last year.
• Winter rain exceeded what was needed causing multiple operational problems.
• SFW1 Wheat: $ -5 ($276 to $286). Exporters are still bidding aggressively for wheat and barley out of Portland and Geelong.
• Feed Barley: $ -13 ($225 to $235). This $44 a tonne discount to wheat means barley is the grain of choice for spring feeding.
• Triticale prices $ +0 ($260 to $270). Very little trade as supply is sparse.
• Feed oats $ +0 ($186 to $196). Excellent spring grazing conditions mitigate for low demand for grain oats.
• Paddocks too wet to take tillage equipment. In place of the ryegrass, capeweed has invaded the soil surface.
• Dry summer has caused loss of perennial pasture grasses.
• Opportunities to source more grain out of South Australia, as the grain markets there are lower than in Victoria with its stronger domestic demand.

• With very little hay of any variety available many will be keen to make the most of a good spring and re-plenish their fodder supplies.
• There is very little fodder being traded in South West Victoria, with some taking advantage of falling grain prices to fulfil their requirements until there is more certainty in new season fodder prices.
• There are some small quantities of vetch silage (wrapped or chopped) presently being cut in the Wimmera. It is reported that baled and wrapped silage delivered to South West Victoria is trading at $230-260/t DM delivered.
• Across the other fodder categories this week prices remain unchanged, primarily due to limited trading and demand for hay.

• Mount Gambier September rainfall: 48.4mm (Ave: 72.6mm).
• YTD: 607mm (Ave: 564mm), compared to 561.2mm this time last year.
• 11 millimetres of rain this week after 21 millimetres the previous week.
• Wheat $ -13 ($249 to $259). Price drop due to the change of focus to new crop.
• Feed barley $ +18 ($228 to $238). The price correction this week has significantly narrowed the price gap to wheat to $21.
• Triticale $ +15 ($230 to $240). It is in short supply but represents good buying within this price range. Its extra energy over barley is not currently of commercial value to dairy farmers.
• Oat prices $ +0 ($170 to $180) 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.
• Cheaper to currently source grain out of SA.
• These recent rains are proving useful in continuing the spring feed growth prospects for these late growing season regions.
• Problems associated with soft paddocks and pugging have now gone.

• The coming hay seasons looks promising with good soil moisture and as the days warm up, pasture and crop growth are increasing.
• Demand for all categories of fodder has slowed significantly in the past month and there is very little trading at present. Some buyers are taking advantage of falling grain prices while they wait for new season fodder and more competitive prices.
• Fodder prices across all categories remain unchanged this week, directly attributed to the lack of trading.

• Murray Bridge September rainfall: 26.3mm (Ave: 36.5mm).
• YTD: 298.4mm (Ave: 262mm). 374.2mm this time last year.
• Wheat $ -26 ($221 to $231). Market is now working to new crop values.
• Feed barley $ -20 ($201 to $211). Margin below wheat is now $20 a tonne favouring barley for spring use.
• Triticale $ +15 ($250 to $260). Triticale fits at this price range with competing grains of old crop wheat and barley. Supply is limited and very little if any is being currently offered.
• Feed oats $ -5 ($188 to $198). Less sheep demand currently for oats with paddock feed increasing.
• Barley is the preferred grain for spring cow feeding.
• Central district vetch crops will be looking to be cut down this weekend. Farmers are waiting for the rain to pass late in the week and begin cutting over the weekend.
• Spring growing conditions for both crops and pastures are excellent.

• The hay season has commenced for some growers in Central SA and on the Ayre Peninsula. Given it has been quite wet over the past few weeks quality is the biggest concern for growers, with some mixed grade hay expected.
• After favourable growing conditions this year, big yields are expected for this seasons hay crops however quality may be average.
• There is little carry over hay from the 2012 season and supplies are low.
• With no reports of active trading of bulk hay, all fodder categories remain unchanged at present, and are awaiting prices for new season hay.

• Bunbury September rainfall: 175.2mm (Ave: 81mm).
• YTD 751mm (Ave: 654.4mm), compared to 556mm this time last year.
• Another week of heavy rains with key areas getting 50 to 60mm
• Wheat: $ 10 ($272 to $282). A slight rise in prices this week may be limited to feed grains.
• Feed barley $ +15 ($252 to $262). At a $20 discount to wheat this is one of the few areas within Australia where it is at the traditional discount range.
• Triticale $ +15 ($260 to $270). Very little trade occurring as the commodity is becoming increasingly harder to source.
• Oats +30 ($195 to $205). Less demand for oats as it is no longer needed for sheep feed.
• Good opportunity to put down substantial reserves of cheap fodder for future years.
• Plenty of grass currently but the emphasis is on grass quality.

• Given it has been quite wet over the past few weeks quality is the biggest concern for growers, with some mixed grade hay expected.
• Silage production has commenced in parts of south west WA.
• Hay trading on the domestic market is slow and fodder prices remain unchanged this week, after softening in the previous week.

• Smithton September rainfall: 75.2mm (Ave: 104mm).
• YTD: 781.8mm (Ave: 698.9mm), compared to 752mm this time last year.
• Another week of solid rains. Barringtone received 57mm and Sheffield a further 82mm.
• Wheat $ -2 ($358 to $368). Mainland traders are anxious to do business in Tasmania before new crop rolls in.
• Feed barley $ -3 ($312 to $322). Huge discount to wheat on the mainland.
• Triticale prices $ +0 ($348 to $358). Currently no demand. Local wheat is a better proposition for cows.
• Oats prices $ +0 ($268 to $378). With enough natural feed available the demand for oats is considerably less. Incoming crops are looking really good and there is plenty of natural feed.
• Grain usage is currently low while quality grazing continues.
• Mainland crops further improved after general rain this week.
• Barley is cheaper and should have enough energy for the needs of most cows to produce milk at a high level.

• Growth has been slow and ground temperatures have stayed low. It continues to be very wet in Northern Tasmania.
• Prices for fodder all fodder categories remain unchanged in Tasmania this week. Despite demand remaining strong there is limited supply for trading.
• On King Island the season has also been very wet of late and the silage and hay season will commence later than usual as a result. With the local abattoir closing down for good 12 months ago, stocking rates for cattle have remained high and the demand for hay strong. Pasture hay is presently trading at about $155-$175/t ex farm.