Explainer: How Australian hay and grain prices are tracking

The hay sector is facing new challenges while falling grain prices may trim further inputs for many farmers.

The early autumn break and above average growing season rainfall is setting some new challenges for the hay sector.

The early autumn break and above average growing season rainfall is setting some new challenges for the hay sector.

There is still some growing season left for graziers in southern Victoria, but supply should not be a problem if the warm and dry weather can generate a boost to pasture growth.

Dairy and beef producers in Gippsland enjoyed favourable grazing during a relatively dry April and May and supplementary feeding of hay and silage was below normal.

This month however, there has been some flooding south of Morwell.

Up to Monday morning, Morwell has received 110mm of rainfall compared to the monthly average of 66mm.

Graziers report these central Gippsland paddocks have been wetter than those of Labertouche in west Gippsland.

These late winter falls have meant boggy paddocks are a common problem requiring careful rotational grazing in Gippsland.

The levels of supplementary feeding has increased in this time and local supplies of round baled pasture hay are well down.

The clear sunny days of last week were welcome as pasture growth has been limited in the cold and cloudy days of August.

Clear drier weather forecast for later this week may allow soil temperatures to increase from their current level of 10 degrees and prepare pastures for silage cutting in October.

Although the southwest of Victoria suffered a late break and limited autumn growth from renovated pastures, feeding bought in hay has not been an expensive exercise this year.

Cereal hay prices have seen only small increases over winter and many dairy farmers invested in good quality vetch hay prior to prices increases of May and June.

These southern livestock producers should be able to harvest adequate volumes of low to moderate quality hay and silage this spring, but they will be looking to boost this supply with high quality hay from north of the Great Divide.

Given the generous growing season rainfall, broadacre hay growers have rust issues with cereal crops including oats.

This can tend to spoil the appearance and marketability of hay but not suffer major discounts of nutritional value.

Vetch hay growers in the Wimmera are concerned their crops are large and their soils wet. Unless there is a dry September, they anticipate they may suffer big vetch windrows laying over wet and humid paddocks, resulting in long curing times and dark and mouldy hay.

The underlying domestic hay prices may remain steady this spring but premiums for quality are likely to be significant.

GRAIN:

Optimism of grain growers in southern Australia for high yields is building but falling

grain prices may trim further inputs for many.

Social media is telling a story of above average rainfall and bulky crops that require

feeding with fertiliser and the protection of fungicides to maximise yield potential.

Canola growers in the West Wimmera are hoping yields will be their best ever.

The early Autumn break and moist soils combined with well-timed applications of fungicide

and urea has canola yield expectations over 3 tonnes a hectare.

Within the canola canopy, crops are thick with pods and new flowers at the top of plants

will have a good chance of achieving harvestable seed.

Although moisture needs are mostly satisfied this season, yields can still be battered by frost, hail and wind during September and October.

The warmer weather is more likely to generate more intense rainfall, like the heavy rain

and hail that blanketed much of western Victoria on Monday.

August rainfall will be close to average in all cropping regions of Victoria, southeast South Australia and the Riverina but will be at least 25 per cent higher than the monthly averages in the northern and central wheatbelt of Western Australia, the remainder of NSW and both the Eyre Peninsula and mid-North of SA.

According to the Grain Industry Association of WA, rain during July and August has boosted yield expectations to above average in the Kwinana and Geraldton port zones which have more than compensated for the lower yields expected in the wetter Albany and Esperance ports zones.

The 15 to 25mm forecast for Victoria and the Riverina may be more than some would prefer, as timely spraying of fungicides and spreading of urea could be hampered.

Grain prices have been falling due to the increasing comfort of global supplies.

Recent trading broke this trend and this week new crop bids on a Geelong basis include canola at $747 a tonne, up $20 a tonne, BAR 1 grade barley at $320 a tonne up $13 a tonne

and conventional canola at $747 up 20 a tonne.

Yield concerns for US corn and soyabeans have surfaced with some hot and dry weather in the Midwest and excess moisture in the southern Delta region.

Traders are also closely watching the shipments of grain from Ukraine and Russia.

Since the bombing of Odessa, the negotiated trade corridor is functioning as well as can be expected but the passage of ships remains fragile and deserving of a risk premium in prices.

Of the prices traded over the past 10 years, wheat prices are trading in the highest 20 per cent and canola prices are within the highest 25 per cent.

At $1,100 a tonne ex-works, urea prices are still twice the level of last year and fungicides costs are also considered excessive.

Due to these high costs, growers are baulking at spending more than they need to for spring applied inputs.