Mixed outlook for hay over winter

New issues could boost hay demand while a global corn shortage has major implications for grain growers and consumers.

Seasonal factors are affecting hay growth and supply.

Now that the last of the summer crops have been baled, the fodder supply base for winter is set.

Lucerne growers have reported consistent demand from the horse sector as interest in recreational riding has been maintained throughout the past year.

Lucerne demand from the other livestock sectors has been less obvious as many dairy farmers have shown a preference for canola meal or vetch hay as protein supplements to their legume pastures.

Vetch hay prices have remained stable since baling albeit at the low levels of $180 to $200 a tonne ex northern Victorian farm. Those parcels of vetch with lower degrees of weather damage are harder to source and have started to rise in price by a nominal $10 to $20 a tonne. The area sown to vetch this year may be challenged by the dry start in the Mallee of Victoria and South Australia and the northern Wimmera.

Vetch remains a popular legume in cropping rotations. Given the relatively low domestic demand and decile three prices for vetch hay, it is likely that an increasing proportion of the vetch sown will be ploughed in as brown manure, unless prices improve in the meantime.

Demand for cereal hay is increasing but unlike vetch hay, prices are yet to show any improvement. Many parcels of oaten and wheaten hay are offered by growers at $190 to $220 a tonne ex Riverina or northern Victorian farm.

Many growers have set themselves a target price of $200, but in order to meet the market and move hay from their sheds, most cereal hay is moving between $160 to $180 a tonne ex farm.

There are a number of seasonal factors that are appearing to increase hay that are directly related to the prolific production of pasture and fodder supplies.

Mice in NSW have surfaced due to the abundant sources of feed, mainly in central western NSW but some new factors are appearing in southern Victoria.

Pasture paddocks south of the Princes Highway between Geelong and Port Fairy have enjoyed some extended grazing. These pastures have remained green throughout summer and the soils did not dry out during March.

Agronomists anticipate this will have implications for winter pasture production and hay demand.

On properties north of the Princes Highway soils dried out during March. As these soils have been able to heat and crack, they are more likely to enable nitrogen to mineralise and discourage the survival of cockchafers. Also dried pastures have created a barrier for fungal diseases.

Mycotoxins have been reported in green standing pastures south of the Princes Highway. In the lighter soils of Mount Gambier, cockchafer larvae activity has been found, threatening root development of new autumn pastures.

Demand for cereal hay has started and growers are hopeful it will step up during winter.

CEREALS SOAR, EU CANOLA UP AS GROWERS STILL AWAIT BREAK

Grain prices are rocketing up, leaving growers with some challenges in selling new-crop, as most crops are yet to emerge.

Since the start of March many paddocks in the northern Wimmera and Mallee have received 15mm of rain or less. Growers are hopeful of some rain this week, but the weekly forecast for the Mallee is for less than 5mm.

Those with large cropping programs are generally pushing on with sowing, but those with smaller, more flexible programs have stopped sowing pending further rain, as there is still time for a confirmed break.

New-crop bids delivered to Geelong port are $262 a tonne for BAR1 grade barley, $326 a tonne for Australian Premium White wheat and $774 a tonne for canola sustainably certified for the European Union market.

These prices are attractive to growers as they represent decile 7.5 for barley, 8.0 for wheat and 10 for canola.

The underlying reason for these prices starts in the southern states of Brazil. The developing late planted corn crop is experiencing dry weather over an extended period.

As yield projections decline, the global shortages of corn rise along with prices.

Brazil is the second largest corn exporter after the US, and there has been a run on US corn to China.

A global corn shortage following dry weather in Brazil is pushing up prices for barley, wheat and canola. Picture: Zoe Phillips

The hope has been that Brazilian production would enable the consistent supply of corn to world markets.

Shortages have resulted in US corn futures increasing 35 per cent since March to the highest level since March 2013.

The tight corn and feedgrain markets means that wheat is the next best replacement for corn in feed rations.

Wheat has its own production risks in the US and EU and prices are closely following the corn movements.

This is not a good time to be an end-user of grain who needs to buy. APW wheat delivered Melbourne for May and June delivery is up $9 this week and quoted at $341 a tonne. Similarly, BAR1 barley is up $11 to $277 a tonne delivered to Melbourne.

Soyabean supplies are also tight and dependent on a healthy new-crop production in the US.

The spike in corn prices makes corn an attractive cropping option for US growers and soyabean prices need to compete for planted area.

In canola markets, Canadian stocks are 30 per cent under the five-year average and have triggered a big rally.

Most Australian growers are focused on new-crop canola prices. A $38 a tonne increase in the Winnipeg futures has matched the rise in the new-crop price.

MORE

MICE THREAT TO HAY, BUT RAIN BOOSTS CANOLA

CROPS TIPPED FOR ANOTHER TOP YEAR

HAY SELLING ACTIVITY GATHERS PACE