Dry conditions in the north prompt fodder buy up
Dry areas of NSW are prompting livestock producers to secure fodder stocks. Here’s what it means for hay prices.
HAY TALK
The dry regions in New South Wales are expanding, placing increasing focus on the stocks of available fodder and how livestock producers will manage to secure ongoing feed for their animals.
Large portions of northeastern NSW and southern Queensland received decile 1 rainfall for the four months from April to July and the August tallies are tracking less than 5mm.
The price of fibre sources such as unmilled almond hulls for cattle have reached levels not seen since the drought of 2017 to 2019.
Almond hulls did hit $310 a tonne ex plant in the Sunraysia of Victoria in October of 2019 but after a prolonged period quoted at under $30 a tonne, they began climbing in March to reach $167 a tonne this week.
This increasing level of supplementary feeding is also reflected in the canola meal prices ex Newcastle which have risen 10 per cent in the past month.
Similar dry conditions were experienced in the Pacific North West in the USA last year. Ranchers snapped up hay in neighbouring states and hauled it to herds in Montana and Wyoming.
These US cattle producers receive collated survey data from the US Department of Agriculture on a range of hay statistics including stock at the opening of the season in May and at the end of the production period and before the peak winter feeding in December.
The Australian industry is starting to question why we don’t have similar guides to hay supply to the US.
Almost as dry as northern NSW is the topic of agricultural statistics but they are valued.
This topic was discussed by hay growers and contractors who met recently in Bendigo for the National Fodder Conference hosted by the Australian Fodder Industry Association.
Unlike the data provided for grain commodities, the data for fodder production from the Australian Government is in decline as the previous records for the 5 different hay types of cereal, other crops, pasture, lucerne and silage are now merged into hay and silage.
The detail provided in the annual surveys and 5-yearly census has also declined as the quality of responses from farmers was poor and could not provide defendable reports.
There is a healthy amount of scepticism of any stocks data that is produced from a survey due to a likely under-reporting by farmers, however experienced statisticians can account for this.
Stocks are the most valuable record for any commodity. The grains industry uses stocks to use ratio as a strong predictor of price movements.
Fodder stock estimates from forecasters are derived from factors including the area of hay and silage cut, the yield of these paddocks, the number of livestock on hand and importantly, rainfall and the availability of pastures for grazing.
There is also an array of Government provided pasture growth models derived from rainfall records, known soil types and satellite imagery. These are valued by the large pastoral stations of Northern Australia and will have a broader appeal in the future.
GRAIN TALK
The dry season in northern NSW and southeastern Queensland remains and price direction in southeastern Australia is increasingly about northern demand and less about export parity and the current retaliatory drone strikes in Ukraine and Russia.
A poor production year is set for many areas of northern NSW where the soil moistures remain in the lowest 10 per cent of historical records.
The line delineating the poor from the average crops has been slowly creeping south from the initial line estimated to be at Dubbo, to a nominal line coinciding with the Mid-western Highway which extends from Bathurst to Hay.
Further south the growing crops are drawing moisture from the generous soil moisture available which has been topped up with some recent patchy rains. Urea is shaping up as a substantial yield limiting factor for some crops.
The northern Mallee appears in good shape, with Ouyen receiving 46mm to date this month and moisture probes under barley crops in the area still sitting at over 90 per cent profile moisture.
Grain production in northern Victoria is now priced for sales into the northern markets.
As demand and prices increase in the northern areas, prices in southeastern Australia are likely to see grain priced out of the lower price tiers of export markets.
US markets open this week $10 a tonne lower for wheat and $3 lower for corn. But exporter bids for new crop wheat have steadied by only $2 a tonne at $410 a tonne and barley prices are up $2 a tonne to $352 a tonne on a Victorian port basis.
After the big $45 a tonne jump last week, new crop canola prices have eased $10 to $757 a tonne on a Victorian port basis.
The warmer temperatures that are forecast in Australia are likely to impact the drier soils of Western Australia. In its review this month, the Grain Industry Association of WA noted the declining state of crops in the northern and eastern wheatbelt and that wheat plants were dropping tillers to conserve moisture.
Some showers in the eastern wheatbelt in mid-August will achieve close to mean monthly rainfall for paddocks near Hyden and Southern Cross.
These mixed fortunes for the growing season rainfall, create some doubts on total Australian grain exports for 2023. This lower wheat and barley production outlook is also found in Canada and Argentina as dry conditions also challenge yields.
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