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Driving Prices Up
- Confirmation that due to the combination of weather conditions and ongoing high input costs there will be reduced hay production in the upcoming season.
- Growers have considered the continual rise in input costs when considering investment in hay production in Spring 2022. A growing number of producers have indicated they will only harvest and process hay for existing customers with long-term, reasonable price, contracts.
- Growers are responding to adverse weather conditions and confirmed forecast of a wetter than average spring and are changing production choices. A large number of vetch crops will be ploughed in for use as a valuable nitrogen source, leading to high protein hay shortages.
- Fuel costs will be factored into hay and sileage deliveries.
- Farmers, especially dairy farmers, are actively securing supplies of any remaining high protein hay due to the prediction for lower production and lower quality due to weather damage.
Driving Prices Down
- Good spring pasture growth continues across many areas. Expectations that a wet Spring will support in paddock feed supplies.
- Lower quality hay stored outside came on to the market to fill in the gaps created by the scarcity of high-quality supplies. This hay was in many cases traded at a lower price point.
- The Bureau of Meteorology’s (BOM’s) ENSO Outlook shows an established La Niña. Tropical Pacific sea surface temperatures have been cooling since June and are now at La Niña thresholds. The models indicate this La Niña event may peak during the spring and return to neutral conditions early in 2023.
- With moisture profiles already at saturation point and the bureau’s outlook for a wet spring/summer firming there are many areas across eastern Australia experiencing flooding.
- The wet weather is already reducing the quality of some product for the new season as it is impacting the cutting and processing of early season hay and silage.
- Wet weather is leading to a high demand for fertiliser and crop protectants as growers look to maintain the health and quality of their hay and grain crops.
- With the fuel excise being reimposed this week, the costs of diesel will rise adding to the already high production and delivery costs for fodder.
- Prices are on hold across the country at the minute as both growers, exporters and the domestic market appear to be waiting for stronger supply signals once harvest commences in full. There is an expectation that prices will rise once the short supply is clear.
- Purchasers of hay with long term relationships and a willingness to recognise the need to pay a price that allows hay producers a reasonable rate of return are likely to be given first preference over new seasons supplies.
- Buyers are encouraged to feed test and view fodder before purchase to be sure of the quality of feed.