Mixed results for hay, but global oilseed markets take a dive
Markets are offering some mixed signals for hay this season while potential changes to US biofuel mandates impact canola values.
There has been at least 25-50mm of rain in the major livestock producing regions of NSW and Victoria in the past week, delivering some mixed fortunes to the hay sector.
At this stage of the winter season, price signals for the hay trade are mixed, but buyers and sellers are quite accustomed to these conditions.
Although flooding has occurred in Gippsland and parts of northeastern Victoria, the recent rainfall has been welcomed by most graziers, especially after the dry April.
East Gippsland graziers north of Metung in the Tambo River Valley received 100mm over two days last week.
Those falls enabled dams to fill and topped up earlier falls, bringing the total to 300mm so far this year.
Kikuyu pastures have browned off due to cold weather, but the clovers have germinated well, setting up feed for late winter and spring.
These graziers and others in Gippsland are generally well set up for feed this winter. Pasture growth has slowed, but many cattle producers are lightly stocked and have had ample opportunity to cut fodder during spring and summer.
As the largest consumption base for hay in southeastern Australia, the dairy sector is well stocked with fodder and hay demand has been mostly restricted to high protein hay.
In the past month, Victorian vetch hay listings have declined 7 per cent and the average prices have increased $2 to $230 a tonne ex farm.
Growers report that most of the cheaper, more weather-damaged lines have been sold and the remaining lots are the better quality higher priced vetch.
The draw down on protein hay in South Australia has been more extreme as tonnages of lucerne hay offered have reduced 43 per cent and average prices have increased $20 to $288 a tonne.
This is contrasted by the market for cereal hay where oaten hay listings in Victoria have increased 7 per cent since mid-May and the average of the prices offered has reduced $3 to $157 a tonne ex farm.
Export demand is not compensating for this lower domestic demand. Hay exporters have already notified their growers that their lack of access to the Chinese market will mean their area contracts for next year will be 30 to 40 per cent down on last year.
Some exporters in Western Australia are forecasting their contracted prices will be $90 a tonne lower this spring.
Hay growers are responding to these signals. The area of oaten hay sown in Victoria is estimated to be 30 per cent down on last year and as much as 50 per cent lower in Western Australia.
The area and production of vetch for next year is already challenged due to the late break in southeastern Australia.
OILSEED FUTURES TAKE A HIT AS PETROLEUM CONCESSIONS LOOM
Welcome rain has been received in the Riverina, eastern Victoria and the southern Wimmera as forecast, but much of the Mallee remains dry.
All but the Mallee are forecast to receive another 10mm to 15mm early this week.
The late start to the grain growing season has delayed field work such as fertiliser applications and growers are hoping for better growing conditions for the remainder of the season to boost yields.
Prices for pulses and canola have been strong recently but international oilseed markets have taken a surprise downward plunge.
Despite the unfavourable weather forecasts for the US corn and soyabean production regions, oilseed commodities fell heavily last week, dragging canola prices down with them.
A news report last week said President Joe Biden’s administration was considering providing financial relief to the oil refiners by easing the mandates for blending renewable fuels with fossil fuels.
Oil refiners claim to be under financial stress due to the cost of the blending mandates and the declining fuel demand during the Covid-19 pandemic.
Soyabean oil, canola oil and distilled corn starch are commonly used as feedstocks for biofuel in north America and Europe.
Any moves to ease the renewable fuel mandates will work against the interests of corn and soyabean growers in the US.
The report, combined with forecast rain for the Canadian Prairies and some trader profit taking was enough to spark a round of heavy selling on oilseed futures markets.
This week opened with soyabean futures traded on the Chicago exchange down $36 a tonne.
Canola futures in Paris were down $33 a tonne and Winnipeg canola fell $36 a tonne.
Consequently, old-crop canola bids in Victoria slipped $19 to $743 a tonne on a Geelong port basis. Canola for direct delivery to Geelong is bid at $741 a tonne.
The early start to the season in Western Australia has enabled canola crops to achieve rapid development.
Like the growers in the Western District, many West Australian growers remain sufficiently confident in the season to consider forward selling canola. Although as much as a third of the US corn crop is used for ethanol production, corn markets were less affected by the news report. Corn futures in Chicago settled up $0.90 a tonne, marginally higher than last week.
Without further news of easing of Indian pulse tariffs, lentil prices delivered to Melbourne eased another $20 to $760 a tonne but new-crop lentils are up $5 to $740.
MORE
CBA AND RABOBANK TIP GOOD WHEAT PRICES FOR GRAIN GROWERS
CEREAL HAY A TOUGH SELL WHILE TIGHT SUPPLIES LIFT GRAIN PRICES
LENTIL PRICES SKYROCKET ON SPECULATION OF INDIA REDUCING TARIFFS
Frost, hail prompts multi-peril crop insurance calls
Farmers are discussing options for multi-peril crop insurance after crops were wiped out in the Wimmera during a hail storm.
Assessing yield potential with just a phone and a ruler
The outcomes for a tough cropping season could be known before harvest thanks to an assessment that uses just a phone and a ruler.