Hay, grain talk: Interest in growing hay on the rebound

Despite one of the worst years for making hay that many can remember after the wet spring, more growers are willing to re-enter the market.

GRAIN TALK

In what could be described as a doughy week for many commodities, lentils are offering some positive signs for growers.

Lentil prices for all cultivars are on the rise as buyers out number sellers.

The recent demand for lentils has been triggered as exporters complete the accumulation of

their bulk shipments in Portland and Adelaide.

Two ships are due to load 43,000 tonnes of lentils from Portland this month.

A vessel carrying 12,800 tonnes of lentils departed the Port of Adelaide last week and is destined to Chittagong Bangladesh.

Lentil harvest at Ultima.

A further 8,200 tonnes of lentils are due to load in Adelaide this month.

Buyer interest for both bulk and container shipping has increased.

Exporters are bidding $750 a tonne delivered to Wimmera packers for nipper type lentils, up $40 a tonne from last week. Jumbo2 lentils are also bid $745 a tonne delivered to Wimmera packer.

Brokers are quoting nugget type lentils at $805 a tonne delivered to packing plants in Melbourne, $20 a tonne higher than last week’s rates.

Bangladesh, like many other subcontinent countries, has been beset with economic woes

and restrictions to foreign currencies.

Letters of credit from banks to facilitate imports to these countries is often restricted to essential food items such as wheat, chickpeas and lentils.

Pricing for other commodities is flat. US corn and soybean markets were sold off last week

due to technical reasons and Europe remains dominated by the surge of grain exports from

Black Sea exporters and Russia in particular.

The French futures exchange was down $5.50 a tonne for canola and $39 a tonne for wheat.

On local markets the delivered markets in Melbourne for wheat were down $5 to $10 a tonne, while the in-store prices for wheat in the central handling systems were up $5 a tonne.

The best canola bid in the Victoria and Port Kembla port zones this week is $731 a tonne on

a port basis less freight to local site, similar to last week’s prices.

With the comfort of ample subsoil moisture, growers are showing more interest in new crop

pricing.

Multigrade APW contracts are being written at $405 a tonne on a Geelong port basis less freight to local site.

This price is 78 percentile of recent prices and is in the top 22 per cent of prices over the

past five years.

This price is also a $12 a tonne premium to the current values.

HAY TALK
Despite one of the worst years for making hay that many can remember, there is a growing level of interest in growing hay and silage once again.

Hay as a cash crop has fallen in popularity since the end of the east coast drought in early 2020. Many growers felt they had little choice but to drop hay as they had unsold bales in their sheds and the returns for other cropping options such as canola and wheat appeared more promising.

In reality, the area sown to dedicated hay crops would struggle to fall much further. Analysts estimate the area of cereal hay baled in Victoria last year was 90,000 hectares. This is lower than the 110,000 hectares sown in 2011 that followed the boom production of 2010.

As the area sown in 2022 was further trimmed by the wet spring, hay exporters were quick to snap up oaten hay off the baler. At $150 to $170 a tonne ex farm, even the very dark low grade oaten hay has achieved some impressive gross margins at yields of 8 to 10 tonne a hectare.

Picture: Zoe Phillips

Although export demand has been the most visible market, domestic demand is also driving interest in silage production.

The rebuild of the cattle herd and sheep flock of eastern Australia has been impressive. Since the low population numbers set in 2019, cattle numbers have rebounded 23 per cent and sheep numbers 20 per cent.

A solid supply base of roughage is always important for livestock and mixed farmers in the cropping regions are showing increasing interest in silage production for their cattle enterprise. The reduced risk of weather damage during the short wilting phase of silage will be a welcome change to the long curing times of hay.

Hay traders are finding it tough to move hay this year. Some have resorted to selling silage as it is higher in quality than the bleached and dark cereal hay that is commonly available.

Another alternative source of marketable hay is old season hay that had suffered rain at curing in 2021. This hay was initially discounted to $140 a tonne two years ago. In light of the extreme damage suffered this season, this hay is now looking attractive and selling for $200 to $250/t ex farm northern Victorian farm.

A particular quality for buyers has been the hay baled from flooded paddocks. The silt and dust that coats the leaves of lucerne or cereal hay imparts an unpleasant smell that reduces palatability to stock.

Quality issues such as this have created some massive price premiums for chaffing quality hay. Normally chaff mills would pay a $50 to $100 a tonne premium for chaffing cereal or lucerne hay over that paid by dairy farmers for milking quality hay.

This year the chaffing premium has blown out to $200 a tonne with chaff mills paying the ex-farm equivalents of $500 a tonne for lucerne and $350 a tonne for cereal hay.