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Grain & Hay Report: BIG Grain Crop Expected in Northern Hemisphere

Grain & Hay Report: BIG Grain Crop Expected in Northern Hemisphere

20 August 2013

AUSTRALIA - For the week ending 16 August 2013, USDA confirmed that there's a BIG grain on the way in the northern hemisphere for 2013/14 - which more than likely will drive grain prices lower over 2013/14, writes Dairy Australia.

Dairy AustraliaHaving said that, the market keeps responding to any upside news if a weather problem pops its head up, just like a potential upward move for oilseed prices if a cold snap or frost damages what is already a late US soybean and Canadian canola crop. These are risks, but there is no confirmed damage at this point.

The northern hemisphere cereal crops (wheat and corn) are much closer to being in the bin, so the prospect of a price rise coming out of that scenario is getting slim. That leaves the factors which could drive prices higher in the last half of 2013 down to:

  • a slump in southern hemisphere crop prospects (Aussie crop is coming along well so far)
  • new demand (China can be a wildcard here)
  • a sliding A$ which could hold A$ prices up.

Overall however, the outlook for grain prices into 2013/14 is bearish.

Local crops in Australia are advancing well for this stage in the season. Generally, crops are on track for average yields at this stage. As always, it will be the spring time weather which really sets the yield.

Old crop supply of feed grains remains tight on the east coast of Australia due to strong feedlot demand and an active export program. For that reason, we may not see the full reductions in grain prices on the east coast until our new crop arrives in Nov/Dec.

A message out of this is don’t assume supply will be available freely from August-October unless you have had discussions with your feed supplier about your requirements. There may be price spikes in this period if users are caught short.

It is two weeks since our last report and the local grain market traded about $5-20 lower depending on which grains or region. Barley is down $15-20 in the northern states of Qld/NSW and wheat is down $10-20 in South Australia.

Australia's Hay Market Overview

With the fodder season just around the corner demand for hay across the country is starting to slow down. Cash flow is one of the key drivers for decreasing activity in the hay market, particularly in the dairy sector.

Despite a drop in fodder prices in southern Victoria and South East SA a few weeks ago there hasn’t been a lot of movement in fodder prices nationally this week.

Coming into the 2013 fodder season there is going to be very little carry over fodder. Contractors and packaging suppliers are anticipating a big hay season right across the country as farmers try to re-fill hay sheds. At this year’s National Fodder Conference held in Palm Cove last week hay growers, traders and contractors from right across the country generally expressed optimism toward the hay season ahead. In most regions, despite a late start for some, the fodder season is shaping up well with good yields expected and lots of interest in making hay.

North Central Victoria is looking particularly good with cereal crops destined for oaten hay set to yield at about 3t/ha or as good as 5-6/t ha if there is decent follow up rain in early spring.
With good water allocations available for the summer cropping season it is likely that there will be an increased interest in maize silage.

In Queensland feedlots and dairy’s remain active buyers. New season hay should come onto the market as early as late August or September and will provide some relief for buyers who are struggling to source fodder presently. We have had reports of cereal crops already being chopped for silage and cut for hay in Southern Queensland.

Straw is still in demand, particularly in South West Victoria and South Eastern South Australia.

Supplies are starting to become very low now.

The season in WA has dried of considerably over the past few weeks. Although there was patchy rain across the state over the past week most are forecasting reduced crop yields, particularly in the eastern wheat belt where it is very dry. There will be serious concern for the fodder season ahead in WA if there are no substantial rain events in the near future.

Most areas of QLD remain very dry and fodder has been sourced from as far away as Central SA and southern Victoria to supply desperate buyers through the region. Areas that have access to water and can bale lucerne have been selling their hay straight behind the baler.

Reports of graziers in South West Victoria, South East South Australia and the Wimmera-Mallee turning livestock onto winter crops and pastures initially intended for hay could be an indication that fodder shortages might be set to continue into 2014. This will depend on the season, particularly rainfall events in late winter and early spring.

We are hearing more and more reports of both buyers and sellers getting burnt in fodder transactions as the market becomes tighter. It is important to ensure that both buyers and sellers look out for themselves by using written contracts for all fodder transactions, especially in current circumstances.

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