Grain – Hay Report – 18 October 2013

International & National Summary – Grain:

• It appears Democratic and Republican leaders have reached an agreement to extend the debt ceiling until February and reopen government and essential services. When USDA reports are released any variances to the trades opinion could have a large impact on the market and subsequent price changes. CBOT December futures ended the week down 3.75 USc/bu to close on Monday night at 685.50 USc/bu.
• The Australian dollar continues to rise, causing further price strains on new season grain. The dollar closed for the week at 95.01 US cents culminating to the highest point in the last two months. As the Australian dollar continues to gain ground it offsets any gains we are seeing in the US futures.
• Wheat prices ended the week down on the back of production concerns in the Black Sea and South America easing. Recent rains across South America have alleviated immediate concerns for the progress of the Argentinian crop. Production is estimated at 11 mill t by Informa up on the 8.8 mill t produced last year. Concerns that the Black Sea region would miss the their opportunity to plant were eased with dry weather allowing access to fields.
• Domestically 2013/14 crops are almost home as many regions are well into harvest and the remaining areas not far away. Despite regions of minimal production to due to dry weather the national wheat crop is in reasonable shape as it approaches the finish line estimated at 25.9 mill t.
• The harvest is progressing quickly through the Northern states. With minimal rain throughout the growing period quality and yield are below average in these and competition for trade is resulting in a domestic premium. Trade of new season grain is picking up speed as the harvest rolls through Queensland into northern New South Wales. Growers are content to sit on harvested grain at current rates forcing feedlots and domestic users to pay premiums to the market to guarantee supply
• Feed barley remains under pressure from a large northern hemisphere corn crop hitting the market. It’s current discount to wheat represents good buying opportunity for feed use in comparison to wheat. As harvest begins to commence it is expected one of two things will happen. Either wheat prices need to fall relative to feed grain values or feed grain will lift relative to wheat. Either way it is expected the spread will narrow with possible downward pressure on both commodities as the supply shortage is stemmed from the incoming harvest.
• A number of growers and traders are attempting to clean up remaining parcels of old season stock to avoid being lumped with discounted grain as harvest commences. As has been the theme in last six weeks the majority of trade is occurring out of on farm storage so continue to be vigilant about quality checks. There is minimal grain available from bulk handler sites currently.

• There may be the opportunity to pick up old season parcels of grain before harvest commences as growers look to clean up the previous years stock. As majority of the old season domestic trade seems to be occurring out of on farm storage continue to be vigilant about quality checks.

National Summary – Hay:

• We are currently seeing large variations in hay trading activity across all regions as the new seasons crop becomes available. As this early trading activity continues we are getting initial indications of the new seasons prices however it should be noted that many of these prices are speculative and will become more definitive as the season progresses.
• Dry conditions in northern Australia are fuelling a strong demand for fodder. Due to limited carry over hay and active purchasing behind the baler for new season hay supplies in Northern NSW and QLD are limited. If the season fails to improve soon the northern fodder demand will start to put pressure on the southern supplies of hay.
• In the southern market there are reports of the silage harvest being slightly down on average this year. This is seeing some buyers making purchases of vetch hay and silage now, to meet their demand for winter feed.
• Coming into the 2013 fodder season big yields were anticipated. With baling now underway there is an indication across the country that yields are slightly down on these early predictions, particularly in South Australia and Western Australia.
• Fodder analysis results to date are showing high levels of variability in the quality of hay so far. Buyers are recommended to get feed analysis before making any hay purchases.
• Given the variability in the market at present growers are considering their options for marketing new season hay and will be re-stocking their own sheds before trading any hay.
• With yields down slightly on original estimates, dry conditions in the north and variable hay quality in the west it is unlikely that the 2013 season will see all depleted fodder stocks replenished, as has been widely speculated. We expect that in 2014 hay trading will remain active fuelled by strong demand and supplies, particularly for protein hays will be tight.
• Buyers who rely on purchased fodder are well advised to start talking to their suppliers now, in order to secure their 2014 fodder supply for all hay and silage types. Of particular note buyers seeking vetch hay/silage should be looking now as supplies may again be limited in 2014.

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: 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.

• There will not be a grain report this week, the next grain update will take place on Friday October 25^th.

• Demand remains strong for hay, with the cattle stations in drought affected Western Queensland the most active buyers.
• Supply is low and it is now coming to the end of the traditional hay season. The low supply is a result of dry conditions in Western Queensland which has put extra pressure on the hay market for most of this year.
• Prices remain firm but steady following a slight increase in price for top quality hay last week.

• There will not be a grain report this week, the next grain update will take place on Friday October 25^th.

• Demand for all fodder types remains strong throughout Queensland with 60% of the state drought declared. Cattle stations in Western Queensland are the most active buyers. It’s worth noting that freight is adding considerable cost to hay purchases.
• Despite new season hay now becoming available, quantities are limited and the overall the supply of hay is low. This is due to dry conditions across the state putting pressure on the fodder market.
• New season hay is of variable quality with some being weather damaged.
• Prices remain unchanged this week.

• There will not be a grain report this week, the next grain update will take place on Friday October 25^th.

• Hay trading remains steady driven by the increasingly dry conditions, with the livestock and dairy industries the most active buyers.
• Supply of all hay types is becoming very low and is mostly limited to high grade, high priced cereal hay or low grade pasture hay or straw.
• New season hay is now becoming available but consistent demand is keeping the price firm but steady. Little hay has gone into storage at this stage.
• All prices remain unchanged this week.

• There will not be a grain report this week, the next grain update will take place on Friday October 25^th.

• 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.

• There will not be a grain report this week, the next grain update will take place on Friday October 25^th.

• Demand for all fodder categories has slowed as spring feed becomes available.
• There is some trading of new season cereal hay from Southern NSW to buyers looking to secure winter feed.
• Overall silage production is estimated to be slightly down this year, largely driven by the patchy seasonal conditions and some growers trying to limit expenditure.
• Hay growers are starting to consider their marketing options for new season fodder. Given the limited carryover stocks anyone with a reliance on purchased fodder is encouraged to consider sourcing their requirements for the year ahead.
• Prices in the Bega region are currently speculative. Limited trading into the region is currently occurring and the new season prices are not yet clear. This week prices remain unchanged.

• There will not be a grain report this week, the next grain update will take place on Friday October 25^th.

• Fodder trading remains slow this week as spring feed is now readily available.
• Cutting and baling new season cereal hay has commenced. Good yields are being recorded but quality is variable. The persistent winds are slowing baling and causing issues for some growers.
• The pasture silage season is well underway and good yields are being recorded. Overall pasture silage production is slightly down this year according to local contractors. This trend is driven by growers intending to take advantage of good water allocations for summer crops (both for grazing and silage) and pastures, and increasing their reliance on purchased cereal hay, in preference to pasture silage
• Anyone who relies on purchased hay is well advised to start talking to their fodder suppliers now as there is unlikely to be an oversupply of hay locally in 2014 and we expect the market to remain firm. High spot market prices in winter next year are likely.
• Prices remain firm but steady this week, after a slight increase last week.

• There will not be a grain report this week, the next grain update will take place on Friday October 25^th.

• Demand for fodder remains slow but steady, with cereal hay and straw bringing the most interest. This week there were also some reports of interest in trading new season silage.
• It has been a patchy start to the fodder season so far, due to a number of factors; wet conditions, cooler temperatures slowing pasture growth and heavy grazing pressure in winter have all contributed to pushing back the start of the silage season. Despite the late start local contractors are predicting an average or slightly better year for silage.
• With slow trading and the focus shifting from purchasing fodder to conserving fodder, prices remain unchanged this week for cereal hay, Lucerne/vetch hay and straw.
• The price for pasture hay has dropped this week, however this is speculative and based on estimated new season prices as well as locally traded pasture silage ($ /t DM). We expect this price to fluctuate further in the coming months based on the amount and quality of pasture hay baled in Gippsland this year.

• There will not be a grain report this week, the next grain update will take place on Friday October 25^th.

• Trading is slow but steady at present. This year there is increased interest from local buyers trying to secure hay now for 2014. These buyers are showing particular interest in new season vetch.
• After a slight firming in the market for cereal hay last week, prices remain unchanged this week, primarily due to slow trading.
• Silage has commenced but to date the season has been quite patchy. Wet conditions have pushed the season back for many growers and this will impact quality. For others early cut silage has been put away with good quality and average yields recorded.
• The patchy start to the fodder season is likely to be the main driver for increased interest from local farmers in purchasing hay behind the baler.

• There will not be a grain report this week, the next grain update will take place on Friday October 25^th.

• Baling has commenced and yields are average but quality is varied.
• Trading is very quiet at present and there is little interest in purchasing hay behind the baler at this stage.
• Fodder prices across all categories remain unchanged this week, directly attributed to the lack of trade.

• There will not be a grain report this week, the next grain update will take place on Friday October 25^th.

• The hay season is well underway in Central SA. The growing season has favoured the hay industry and there are reports of some big yielding crops. Quality is the biggest concern for growers this season, with a wide range of quality expected.
• In general 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.

• There will not be a grain report this week, the next grain update will take place on Friday October 25^th.

• Baling is well underway at present and average or better yields are being reported. Quality is varied this year, a result of high yields and unfavourable weather conditions.
• Silage production has commenced in parts of south west WA with good yields reported.
• Hay trading on the domestic market is slow and fodder prices are still speculative. Most fodder types remain unchanged this week.
• For new season cereal hay there is some indication prices will start around $110-$120 for low grade hay and $180-200 for top grade hay. This is a big drop in price for lower grade hay and may prompt growers to store hay until demand picks up, in order to cover production costs.

• There will not be a grain report this week, the next grain update will take place on Friday October 25^th.

• It continues to be very wet in Northern Tasmania and it is likely this will postpone the start of the fodder season.
• Prices for fodder all fodder categories remain unchanged in Tasmania this week. Despite demand remaining strong there is limited supply for trading.