Graziers drive hay demand as dry spell continues

There are more reasons why hay prices may move up, while rain and its shortages are affecting domestic and global grain crops.

Producers in different regions are reacting differently as dry wether raises the need for feed. Picture: Zoe Phillips

Dry weather is becoming a bigger issue in South Australia and Victoria. Since the end of January, all of South Australia and parts of Victoria north of a line joining Barham with Apsley, have received less than 40 per cent of the annual rainfall.

The southern and central Mallee is forecast to receive 5mm to 10mm early this week but the three-month rainfall remains dry and there is no break forecast in the foreseeable future.

Those conditions can drive demand and shrink supplies, but the response from buyers varies within the different regions.

Graziers in the North East and central Victoria are making inquiries by calling their hay suppliers, assessing what they could buy when they need to.

Further west, hay growers who farm along the South Australian-Victorian border are seeing additional demand, especially from cattle producers. The cold and late break has graziers feeling less confident of winter paddock feed and they are proactively buying some supplements early.

Vetch hay and clover-cereal hay blends have been purchased during the past week by cattle producers in the southeast of South Australia and the Western District of Victoria.

Vetch hay prices remain well supported at $240 a tonne delivered to dairy farms in the Goulburn and Murray Valleys.

The volume of vetch and lucerne hay listed for sale in Victoria has fallen 8 per cent in the past fortnight alone. The late break also weighs on the potential yield of new-crop vetch hay. While growers are increasingly hopeful of sales in the new term, cereal hay sales are still slow. The volume of lower grade oaten and wheaten hay that remains in stacks throughout Victoria, NSW and South Australia is substantial.

Although drought feeding is all but gone, cereal hay still needs to compete with almond hulls as a source of palatable fibre. Dairy farmers have found almond hulls at $40 a tonne ex Millewa plant combine well with grazed pastures and are still a worthy inclusion in their milker rations.

Some hay growers may be happy to carry over hay or increase their prices due to the late break, but there are many more who are still happy to sell their hay at the same ex farm price as they offered during summer.

The prospect of carrying over hay and the news of mice in NSW has many hay growers increasingly aware of mice.

Although some paddocks have been baited prior to sowing and baits have been laid alongside hay sheds, growers are sceptical that mice will venture out from the warmth of their hay sheds to take the bait. Still, mice damage to haystacks south of the Murray River remains minor.

While the key production regions of South Australia and Victoria are dry, the late break is not lifting demand beyond the normal winter-feeding levels.

WHEAT FUTURES DIP, AS VICTORIA’S DRY AUTUMN LIFTS DOMESTIC PRICE

International grain markets remain focused on weather and implications for crops delicately poised at their vulnerable stages of maturity.

Rainfall in southern Brazil is yet to alleviate the moisture deficits for the corn crops.

Analysts are revising down their corn production estimates, but these numbers are now accounted for in prices.

Wheat traders’ attention was drawn to the rain that did fall over the dry spring wheat production regions of Canada and the northern US.

This triggered falls in the Minneapolis futures which flowed over to Chicago and other EU markets.

The nearby delivery wheat contracts on the Chicago exchange fell $16.60 a tonne, Paris slipped $8 a tonne while the Black Sea eased $9 a tonne.

The fallout from these price slumps has been cushioned by some lingering moisture deficits in Victoria. NSW and Western Australia have enjoyed decile eight to nine rainfall so far this year and the convincing autumn break has most crops in and up.

Dry conditions still dog crop regions in some regions in Victoria. Picture: Zoe Phillips

Yet the Mallee and parts of the Wimmera are dry and without a break in late May, concern is rising. Average yields may be possible from a June break, but conditions in winter and spring would need to be ideal.

Mallee growers have mostly completed their dry sowing and are patiently waiting, rightly controlling what they agronomically can. Strategic baiting for mice is common and forward sales of grain are rare.

Some price premiums are appearing to account for the increased production risks in Victoria.

New-crop Australian Premium White wheat prices are unchanged this week with traders’ bids sitting at $306 a tonne delivered to Geelong. New-crop wheat prices for domestic mills in Melbourne are also up $3 a tonne this week.

This is contrasted by the $5 fall in new-crop APW prices in the Port Kembla zone, where traders are bidding $300 a tonne on a port basis.

Prompt barley prices are unchanged at $275 a tonne delivered Melbourne.

The lower wheat price is flowing over into oilseed markets. Chicago soyabean futures were down $28.50 a tonne and canola futures in Paris fell $36.

Traders are bidding new-crop canola on a port basis, with prices of $771 for Port Adelaide zone, $761 for Geelong and Melbourne and $756 a tonne for Port Kembla zone.

According to traders, lentil markets are still waiting for confirmation that the Indian Government will lower or eliminate import tariffs in the short term.

Speculation has boosted nugget lentils to $890 a tonne delivered to packers in the Wimmera.

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