New entrants jump on bandwagon
Shed and baler sales on the rise, yet cereal hay prices remain sluggish as the winter months approach.
CEREAL hay growers are focused on their cropping programs and wondering how new-crop prices will shape up.
While the prices for all new crop options are expected to be lower at harvest this spring, some are wondering if hay can remain competitive in the cropping program.
Few could be expecting the market to repeat the high demand of the last two seasons, however, it is this demand that has seen new entrants growing hay for the first time.
Reports from shed builders are that demand for permanent hay sheds is high and they have a construction program booked for many months.
A similar story is found for hay baler sales, with the machinery industry reporting that the sales in March this year were up 51 per cent year on year.
With this substantial capital investment, these new hay growers will be keen to use their new capacities and are unlikely to exit the hay industry this season.
This is likely to establish a new and higher area of production for cereal hay in Victoria.
The hay market has seen a huge turnaround. At the start of the year it was tough to imagine, but hay demand remains sluggish as we enter the colder months.
A trickle of cereal hay has been selling for $230 to $260 a tonne with some lots selling at lower and higher prices according to quality.
Vetch hay has been selling at a $70 to $80 premium to this, with supplies lower than cereal hay, but demand expected to fall during the winter months when high-protein pastures are available.
The first indicators for new- crop hay prices generally come from the export hay sector.
The consistency of export hay demand will remain an attractive option for grain growers looking to diversify into a commodity that does not fluctuated according to the global trends of corn and wheat.
New-crop oaten hay contracts are available with hay exporters at minimum prices for the top grade oaten hay quoted at $240 to $260 a tonne delivered hay processing plant.
Trends in the export sector remain positive. The export volumes for the first six months of this season show that total Australian exports are up 12 per cent and Victorian exports up 37 per cent.
In terms of our export destinations, shipments to Japan and Taiwan are 2 per cent lower, South Korea was 10 per cent higher, but China was up a massive 73 per cent year on year.
The prospect of a larger hay crop next season is forcing some growers to be cautious.
Some paddocks with high stubble loads that have not been mulched have been switched to grain.
Growers are planning to grow cereal hay only if their paddocks are capable of growing high-quality product.
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