Sluggish market forces growers to sit on stocks

Sellers have to store their carry-over hay and straw as they struggle to sell remaining stocks in winter.

Waiting game: With prices sliding further, fodder sellers are comfortable knowing they can sell off their hay stocks next season.

HAY growers are reluctantly more accepting of carrying over stocks as they have been struggling to clear their residual hay and straw.

A fall in hay demand after the February rains in eastern Australia was always expected to slow the pace of the market.

But hay growers did not expect a market so slow that it would be tough to sell their remaining stocks in winter.

To be in the hunt for sales to price-conscious buyers, the ex-Mallee and Wimmera farm prices need to be at or under $200 a tonne for cereal hay and $70 a tonne for straw.

Compared with other fodder types, straw sellers are prolific, both in number and volume of product on offer.

Straw under $50 a tonne ex-farm in Victoria is more likely to be stored in paddocks, stacked uncovered five to eight bales high. The bottom and top bales of these stacks are often deteriorating through inundation of rainfall and mice are a problem in some Mallee stacks.

The weight of these carry-over stocks adds additional focus to the price outlook for new crop. It’s looking like a high-volume, low-quality year when prices are spread in a wide range of quality grades that are predicated by export contracts established prior to sowing.

Some oaten hay growers have been fortunate to secure contracts for top export grade at $240 to $260 a tonne delivered to their exporter’s processing plant, plus storage and interest components.

Depending on how the spring weather pans out, the portion of the crop that achieves the low fibre, higher energy levels necessary for top grade oaten hay, could be minor.

High quality cereal in drought times is common but in a big year like this, the agronomic skills and luck of every grower will be tested.

At this stage it appears that uncontracted and/or low-grade cereal hay will be cheap.

Last year, when the northern drought was still a reality, the opening prices were between $200 and $250 a tonne ex-Victorian farm.

Because of the weight of sellers who would jump at this price in the current market, new crop hay prices are likely to slip under the $200 a tonne threshold.

In other recent years that share this high-volume, low-demand outlook, cereal hay prices hit record lows.

In the record volume year of 2016, cereal hay was trading off the paddock at $140 to $160 a tonne, while mildly rain damaged hay in 2010 traded between $120 and $140 a tonne.

Many sellers who retain high-quality cereal and vetch hay remain comforted by the potential of higher prices next season. According to those long-term producers, rain during curing is a constant threat for hay and the changing seasons means hay in a shed is as good as money in the bank.

MORE

TIME RUNNING OUT FOR SELLERS AS DEMAND STAGNATES

DISCOUNTING COMES INTO PLAY TO REDUCE OVERSUPPLY

GROWERS, SELLERS TO MOVE RESIDUAL HAY AND STRAW