Hay supply situation clears up

Now that the season’s narrow baling window is finished, farmers are able to truly evaluate the lay of the land for feed.

HAY TALK:

Now that the soggy scramble for impossibly narrow baling windows is over, the true supply

situation for hay and silage is now clearer.

The scarcity of high-quality hay has given some growers a chance to clear some of their old

crop stocks.

The shortage of high protein hay, brought about by the wet spring and slump in vetch hay

production, has seen lucerne demand spike enabling sales of carry-over hay.

As the east coast drought subsided, hay demand collapsed leaving lucerne growers with stocks surplus to market needs.

Picture: Zoe Phillips

Lucerne growers near Wagga Wagga have been selling mid-quality dairy type lucerne cut in

late 2019 for $300 to $330 a tonne ex farm during September and October last year.

But now that the full extent of the hay shortages is apparent, prices are $50 a tonne higher.

Further supplies of lucerne are challenged. The area of productive lucerne lost to floods in the river valleys of New South Wales has been estimated to be 15 to 25 per cent.

While irrigation water is cheap, soil moisture levels are depleted for the dryland lucerne producers looking for high lucerne yields for hay.

Some surprising parcels of cereal hay are appearing especially from the Mallee.

Oaten hay with 30 to 40mm of rain baled in late October from paddocks between Yaapeet and

Woomelang is some of the better quality baled this season.

Knowing that this hay is scarce, quality-conscious buyers have paid $320 a tonne ex farm for this hay.

At the other end of the quality profile, oaten hay that was hit with over 170mm of rain during

curing has been selling to some hay exporters at $170 a tonne ex Mallee farm.

Although the price discount is severe, growers have been reluctantly accepting these prices.

Although the harvest costs are high, the low prices have been partially compensated by the high yields, creating some acceptable grow margins.

Growers are also comforted by the relatively high prices for hay this season.

The last high yielding season that suffered flooding rains was the harvest of 2010 when prices plummeted to $90 to $110 a tonne ex farm.

Prices rarely stay at these levels and after 18 months the average cereal hay prices had lifted $70 a tonne and surged a further $130 a tonne after another 12 months.

Despite the conditions, high volumes of lower quality pasture hay have been baled in southern Victoria.

Some buyers desperate for new seasons have been paying $170 a tonne ex farm in southwestern Victoria for high moisture hay.

While the El Nina weather pattern appears to be breaking down and a wetter than average rainfall is forecast by most weather models, sellers are hopeful of achieving over $200 a tonne ex their sheds for fully cured pasture hay this coming autumn.

GRAIN TALK:

Normally many grain growers in the Riverina and northern Victoria would have retired to the beach by now but for most, the 2022 harvest continues.

A comforting fact for growers who still have two weeks of harvest in front of them is that both yields and prices are above average.

According to some Mallee growers, canola and lentils yielded 2.5 tonne a hectare and wheat

and barley averaged 5.0, making the 2022 season the highest yields in their 40 years farming.

Typically growers have elected to strip the higher value commodities such as lentils, canola

and wheat first, leaving the barley paddocks to last.

Harvesting canola. Picture: Zoe Phillips

As the canola and wheat loads were delivered and a portion sold, a favourable cash flow has

been generated.

Accordingly, growers are more inclined to store their lower grade cereals, withholding them from sale till a more favourable grade spread emerges.

Lentils are also being withheld from sale as growers believe prices have come back too far

too quickly.

Pulses are commonly shipped in containers and freight rates are falling.

Since its peak in September 2021, the Drewry Composite World Container Index has fallen 77 per cent from $10,377 per 40-foot container to $2135 this month.

However, pulse prices, including lentils, have softened due to the rise of global inflation and

the struggling finances of importing nations.

Since July last year, the marketing year to date has seen 77 per cent of lentils exports to India, Bangladesh and Sri Lanka.

Number one grade nugget lentils are quoted by brokers at $715 a tonne delivered to Melbourne buyers, down $90 from last month and $200 a tonne lower than this time last year.

Buyers are also bidding $680 a tonne delivered to container packers in the Wimmera.

Due to higher defective features and poor seed coat colour, number two grade lentils suffer a $110 a tonne price discount.

As lentils store well and time may enable growers to clean their harvested number two grade

lentils, growers are punting on improving their returns with lentils.

Cereal grain prices have also began the year lower with the ASX wheat futures price slipping

$23 a tonne in the last week to $381 a tonne.

Most grades of wheat delivered into the central handling systems have followed with trend with the exception of Australian General Purpose wheat which is $5 a tonne higher this week

at $375 on a Geelong port basis.

A stronger Aussie dollar and weaker crude oil prices have pressured canola prices.

Canola bid prices have fallen $20 a tonne this week to $735 on a Geelong port basis.