Oversupply, falling prices hit market
Buyers are keeping their hands in their pockets with winter supply exceeding demand and all indications of a bumper crop in spring.
THE stalemate in the hay market continues, with neither buyers nor sellers making substantial moves.
The traded volumes of hay are well below normal and hay stocks are likely to build next season.
Every year is different for agriculture and 2020 is not a typical year for the hay market.
In seven out of 10 years, hay prices have risen from the end of summer to mid-winter.
This year, like 2010, 2014 and 2017, winter hay supplies have exceeded demand and prices have fallen in this period.
Weather is playing a big role this winter.
Most soil probes in the Goulburn Valley and North Central regions are showing soil moisture levels of 75 to 100 per cent of the capacity in the top one metre of soil.
As these two regions grow 60 per cent of Victoria’s cereal hay, there is growing confidence in hay production this spring.
The more the soil profiles remain at these levels the more hay production is underpinned this spring.
Even if spring conditions cut off early, as they have often in the past, there should be enough moisture to meet at least average hay yields in the north-central and Goulburn Valley regions.
The promising outlook is weighing on hay demand.
Buyers can see that there should be plenty around this year and there is no need to rush out and build stocks for carrying over.
Soil moisture levels are not as high in the Wimmera and northern Mallee and some have shown a falling trend over the past month.
In the Murray and Goulburn Valleys, dairy farmers who did not irrigate their pastures during autumn have benefited from the late summer rains.
Pastures have responded well and their paddocks are standing up to the traffic of their herds, showing little signs of bogging.
Water prices are also weighing on hay prices.
While temporary irrigation water prices peaked at over $600 a megalitre in the Goulburn and Murray districts during January, they have since fallen to between $180 to $200 a megalitre.
Dairy farmers in these irrigation districts should be able to irrigate spring pastures and crops to make hay at prices competitive to purchased hay.
Despite the falling demand, hay stocks on sellers’ farms are considered lower than normal. Straw sellers have amply stock and many are prepared to discount prices if it means they can clear their stacks from the building mice populations.
Over the past two seasons, hay prices in eastern Australia have been highly profitable for Victorian hay growers, however the volatile prices and shortages of feed and water for stock have caused massive culling of livestock, ultimately leading to a smaller hay market.
The hay sector is in a stock-building phase.
A healthy carryover of fodder, whether it is hay, silage or straw, is necessary to help sustain our livestock industries.
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