Below $200/t forecast as prices come back to earth

Growers brace for lower revenues despite good rain assuring strong production of new-crop hay.

Feed frenzy: The boost to pastures is expected to drive falls in hay prices, but falling demand was already on the horizon. Picture: Zoe Phillips

PRODUCTION of new-crop hay is looking more assured and the doors are closing for outlets for old-crop hay.

Last week’s rain provided a welcome 25 to 50mm across southern NSW and 15 to 25mm to all but East Gippsland and southwest Victoria.

Also more follow-up rain is forecast to start today, providing more assurance that reservoirs will gain inflows and pastures and crops will support a rebuild of fodder stocks.

Already, hay growers are bracing themselves for the domestic hay market to dip below $200 a tonne ex-farm for cereal hay.

Supplies of fodder have been in decline since the record year of 2016-17 when yields of hay and silage hit a peak.

Stocks from the spring of 2016 were retained and fed out or sold over the subsequent two-year period and supported the supply of hay to the northern drought during 2018 and last year.

While the price outlook for hay is low and growers who sell hay as a cash crop will suffer lower revenues next season, hay demand would suffer if the high prices of the past two years were to continue.

Some stark evidence of this is found in the most recent release of Victoria’s livestock data from the Australian Bureau of Statistics.

The survey, from June last year, showed that dairy cows, either in milk or dry, had declined 12 per cent from the year before to 898,256 head.

In this period dairy farmers suffered input prices that were unaffordable compared with the prices of milk they received.

Cereal hay prices traded between $315 and $400 a tonne delivered to dairy farms in the spring of 2018, barley and wheat traded at the delivered Melbourne equivalent of $370 and $425 a tonne respectively and temporary irrigation water was costing $400 to $600 a megalitre depending on zone.

High commodity prices have also affected the beef herd. In the two years to June 2019, the number of meat cattle in NSW had declined 25 per cent to 3,783,000 head.

To hear reports of prolific pasture growth in areas that had been decimated by drought such as the New England region and Hunter Valley, is heartening.

Herd building will be slow. It may be many years until these producers need supplies of hay from Victoria and the Riverina again, but the ­capacity remains.

Drought has left its impression on the landscape and is imprinted on the supply chain.

The sales boom in new balers and hay sheds will enable the baling and storing of valuable stocks for future supply shocks.

A limited network did exist in the northern Mallee before 2018, but the new road train routes gazetted in Victoria are of great value.

Now that we have road trains capable of efficient and safe transport of hay from Horsham and Charlton, the hay sector is better prepared for the next drought.

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