Hay selling activity gathers pace

While hay growers are hoping for a lift in prices, the grain market is surging on global demand.

Cereal hay is on the move, but supplies remain high. Picture: Zoe Phillips

MORE hay is moving and hay sellers are hoping this trend continues.

Loads of pasture hay are being transported locally within southwest Victoria south of Hamilton and trucks carrying vetch hay are delivering loads contracted earlier.

Supplies of the protein hays are falling as they often do at this time of the year.

The number of vetch hay sellers with parcels offered at $130 to $160 a tonne is diminishing.

These parcels of vetch have either been snapped up or the sellers have raised their prices, as listings in this price range are less than 20 per cent of the offerings.

There are currently three times the number of cereal hay listings as there are vetch hay listings.

Cereal hay growers have a lot riding on the weather over the next six weeks.

In an each way bet, some good soaking rains will boost the yield prospects for their new-season cropping program.

But continuing dry weather over a broad area of south eastern Australia may help clear their storages of a commodity that has been the most difficult for many to sell.

The coastal edge of southeast South Australia and southwest Victoria received 15mm to 20mm last week, but the most of Victoria and the Riverina received less than 5mm and NSW failed to see any rain.

According to meteorologists, the broader international weather patterns are changing. The Pacific and Indian Oceans are moving away from their La Nina pattern, which has dominated east coast weather since last September.

Although the oceans and their impact on weather are resetting and are typically poor predictors at this time of the year, the models suggest that weather to the end of June will be neutral to wetter than normal.

The classic timing for the autumn break 30 to 40 years ago was Anzac Day, but it has not delivered rain this year. The forecast for the outlook period is for less than 5mm over Victoria, South Australia the Riverina this weekend.

If the rainfall for the balance of the month is as forecast, April will be alarmingly dry, with less than 20 per cent of the average falling in the northern half of Victoria and all of NSW with the exception of the north eastern corner.

The root zone moisture or soils in the Victorian and South Australian Mallee are already below and well below average.

The changing weather patterns act as a reminder of how volatile hay demand and prices can be. Despite this, any lift in demand will take some time to translate to higher prices as the market is heavily supplied.

It will take a sustained period of dry weather over a range of agricultural regions before dry weather can be translated to higher hay prices.

WHEAT, BARLEY AND CANOLA UP SHARPLY ON GLOBAL DEMAND

APRIL and May can often be a period for volatile grain prices and this year will not disappoint.

Delivery of grain to export and domestic buyers has already been tough as trucks are in short supply and many growers are busy in paddocks fully focused on sowing.

But it was the world markets that tipped the scales late last week, sending local values up sharply.

The domestic and export delivered markets have been the most affected, especially for the lower quality wheat grades. Benchmark prices for Australian Standard White wheat delivered to Melbourne mills spiked $23 a tonne to $330, while BAR1 grade barley was up $10 to $265 a tonne delivered.

Exporters accumulating grain for shipments are caught in the price surge as well.

Unanticipated delays to deliveries during a shipping program can keep exporters up at night.

Wheat for direct delivery to the port of Geelong is bid $329 a tonne for ASW and $334 for Hard 2. Both are up $24 a tonne.

By contrast, the exporter bids for grain already warehoused in the central handling systems have increased a more modest $10 a tonne for ASW and H2 wheat.

These price changes are symptomatic of a market that is under logistical stress. Many traders suffer an inability to readily move existing grain stocks by road or rail to contracted destinations.

Exporters are hoping the higher prices may entice growers with their own trucks to pause their sowing and transport grain to port.

A combination of restricted trucks and shortage of stocks and a $125 a tonne increase in Paris rapeseed futures have pushed canola prices higher.

Canola for direct delivery to Geelong has risen from $652 last week to $705 a tonne.

As impressive as this seems, there is little uncommitted canola remaining.

Underpinning these price movements has been corn. The second planting of the Brazilian corn crop is suffering from dry conditions.

Analysts estimate that as much as half of the crop was planted outside the ideal planting window.

As the normal dry season starts in May, some analysts estimate corn production could be trimmed by five to 10 million tonnes.

As Brazil exports just under a quarter of global corn supplies, any shortfall will need to be made up with other grains and wheat is increasingly likely.

Wheat in the US has been trading at an average premium to corn of $57 a tonne this season, which has now closed in to $26 a tonne.

With the burgeoning corn demand from China and Brazil’s production problems, a solid floor price is forming for wheat.

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