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Dairy Australia - Hay and Grain Prices

24 March 2014

Dairy Australia - Hay and Grain Prices - Week Ending 21 March 2014Dairy Australia - Hay and Grain Prices - Week Ending 21 March 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 quoted are exclusive of GST.
Dairy Australia - Market News

International & National Summary - Grain:

  • International values continue to rally as funds look to gain further exposure through speculative buying at current levels. CBOT wheat futures pushed A$13/t higher in the last week to close at A$274/t on Tuesday night. The Australian dollar rising slightly over the week to close at 90.3USc helped offset the lengthy gains seen in Chicago.

  • Speculative buying was largely on the back of the escalating crisis in Crimea. The physical flow of grain is yet to be affected with international consumers still purchasing Ukrainian grain and Ukraine maintaining exports. However the potential impact on logistics and further movement of grain is causing concern. Expect any political developments to have a significant impact on international values and subsequently cause further market volatility. If the situation is resolved quickly the premiums this crisis has caused will dissolve rapidly.

  • US winter wheat crop conditions are having a bearish influence on international wheat values. As the crop begins to break dormancy there isn’t sufficient moisture at this time of year for spring growth. Traditionally this time of year is volatile as the market focuses firmly on US crop development. There is still three months until the winter wheat harvest in the US and if rains are received the spring the yield potential could turn around significantly. Crop estimations at this time of year are nothing more than estimations that fuel the market and should not be read into too much. Volatility in the market can however present opportunities to make purchases in periods where the market troughs.

  • The recent rally in international values has been reflected in domestic Australian prices for both old and new crop. Grower’s reluctance to sell combined with buyers willingness to bid at increased values has seen local values mirror offshore market gains.

  • Unfortunately for end users in the southern states strong export demand continues to drive prices. The spread between barley and wheat has widened as barley fails to reflect the rallies experienced in wheat. Until general rains are felt across the state many grain producers are content to hold remaining grain having already locked in profits for the past harvest. Expect little supply to enter the market until they are confident of adequate moisture for production. This could see prices temporarily inflated until there is more liquidity in the market.

  • The northern feed markets also saw increases on the back of international gains. Reports indicate consumers are only purchasing enough feed to maintain cattle numbers as they eagerly await price relief before further commitment. The dry conditions continue to elevate prices. As prices have now reached import parity international movements will instead heavily dictate price movement. Expect significant price drops if rains so badly needed throughout the region arrive prior to planting.

National Summary - Hay:

  • This week across the country we are seeing prices continue to strengthen as buyers try to secure their winter feed. Most notably livestock producers in the very dry New England area of NSW have become active buyers over the past few weeks as they prepare for the season to turn cold.

  • Lucerne production is underway again in Central West NSW after good rain in February has help to boost growth over the past few weeks. Supply remains short and new season hay will not last long, if it isn’t already sold.

  • Lucerne and vetch hay are becoming increasingly difficult to source, with prices increasing again this week in response to the strong demand. There are still some supplies throughout South East South Australia and Victoria however buyers are encouraged to act quickly to secure supplies for the coming months.

Northern Australia:

  • Despite patchy rain through some regions feed remains very short. Demand for hay is steady and buyers are now sourcing cereal hay from Victoria and South Australia.

  • With many summer crops of maize, sorghum and even soy beans struggling due to the hot conditions earlier in 2014, there is increased interest in baling failed crops. All buyers are reminded of the risks of feeding drought stressed crops to drought stressed stock. Seek advice on using these new feeds so that any risks can be understood before going ahead.

  • Straw is becoming difficult to source and sorghum stubble, where available, is being baled as an alternative.

Southern Australia:

  • Most cereal hay supplies in Southern NSW have been cleaned out and active Northern buyers are now looking to Victoria to meet their demand.

  • Lucerne hay production is underway again in the irrigated regions of Northern Victoria. Growers are up to their fourth or fifth cut. Much of this hay is presold or is moving quickly due to the steady demand from Northern buyers, chaff mills and local dairy farmers.

  • There are good supplies of pasture hay throughout most of Victoria. Quality is variable and sourcing good quality pasture hay for trading is becoming more difficult.

Western Australia:

  • The hot dry summer and continuing dry conditions across much of WA mean that demand for hay from the livestock and dairy producers remains steady. Cereal hay is most sought after at this stage.

  • Cereal hay and straw supplies are good at present. However hay quality is variable.

  • Lucerne hay is difficult to source and prices remain firm.

  • Despite a lower yielding pasture hay season in South West WA last year the quality of hay made was quite high.

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