National Hay Market Report June 2021

KEY POINTS

• Mice continue to run rampant in NSW and other regions.
• There has been some increased demand for hay in Victoria & South Australia.
• Demand remains low for hay into Backgrounding, Dairies throughout the majority of NSW and southern QLD. However, a market for protein hay is proving reasonably strong.
• Protein hays & high-quality Vetch is hard to find, however, quality Lucerne is still available.
• Cattle herds continue to grow, although a long road ahead remains for herd rebuilding nationwide. Some Beef Producers are taking advantage of the high cattle prices and opting to sell their herd instead of supplementary feeding.
• Prices paid for cattle continue to put a squeeze on feeding margins.
• The hay buyers that are in the market are looking for quality and quality only.

OVERVIEW

Unfortunately, mice continue to run rampant throughout the majority of NSW and parts of QLD and Victoria. The mice have gotten to a point where Feed Central has had to reject a large portion of product that growers are wishing to sell due to the severity of damage that has been caused to the hay. The persistence of the mice plague will have long term and short-term effects of the supply of quality hay. Currently, thousands of tonnes of cereal hay and straw are being destroyed by mice who continue to burrow into bales look for food, shelter and warmth on these chilly nights!

If mice continue to run rampant growers will be seriously considering their production choices for new season (for example hay vs grain). Many discussions have already been had with growers who are reducing the amount of land nominated for hay production. In the long-term, this could be detrimental to quality hay supply moving forward. Below are some of the sheds in NSW that our Area Manager, Steve Page, has seen throughout his May on-farm inspection travels.

Some hay growers have managed to keep the mice at bay with excellent control strategies.

Below are photos from one of Feed Centrals’ platinum hay growers, located west of Forbes NSW. This grower prepared early for the mice invasion.

His ingenious idea to create a mice barrier around his hay sheds has protected thousands of tonnes of valuable hay. His solution is corrugated iron sheets steel with steel pickets on hard gravel ground. Crusher dust & gravel has then been pushed up around the steel sheets to seal the bottom entry point.

This grower is still seeing mice climb up the steel posts and running along the top of the corrugated iron sheets at night but has noted mice internally trying to get out to access water. He has a baiting system set up inside the barrier to take care of those who dare to enter.

Our area manager, Steve Page, has inspected these hay lots for sale and has noted no mice damage internally.

If you would like to discuss your storage options or methods with us please do not hesitate to contact us on 1300 669 429.

QUALITY & SUPPLY

Unlike 2020, there was minimal forage summer hay made this season. This can be attributed to concerns about storage with mice pressures, product damage as it stood and uncertain market conditions. Supply will continue to dwindle and as highlighted in the overview. If mice are not kept at bay this will cause major concerns. Regarding all hay & roughage, Feed Central is doing all that is possible via our robust Quality Assurance system which identifies damaged product and helps to ensure damaged product is not delivered to end-user. We do not take listings of hay that is deemed unfit for sale. These are tough conversations to have with growers at times but they’re important and ensure we uphold our quality standards, ensuring our system is fair, smart and simple has been our promise since the beginning.

Vetch supply in Victoria continues to dwindle as does the available quality, Victorian’s end users are still chasing protein. Of the 48 listed lots of Vetch on our online system, only 19 of these are FCA visual grade quality. It is likely that in the coming months the supply of Vetch will become tight. We are already seeing the price of this product being driven up because of this.

There is ample Cereal hay available, despite mice damage. Prices have remained stable and must remain so for any opportunity of movement. The quality of Cereal hay remains variable, the majority of the higher quality 19/20 season Cereal hay is now disappearing. Sales are heavily driven by feed test parameters that are proving their worth (see below chart)

Figure 1 Legend: 
NDF = Neutral Detergent Fiber | RFV = Relative Feed Value | CP = Crude Protein | ME = Metabolizable Energy

DEMAND

Despite hay and straw not flying out of the sheds, there has been a level of normality return to the purchasing of these commodities. Demand in May was driven by the Dairy market in Victoria and South Australia while some Beef Producers in Central QLD also required supplementary feed during this time.

Still remains the fact that the country is in a herd rebuilding phase unlike ever seen before. This phase will stretch well into the next 3 years. While at the same time some Beef Producers have the opportunity to take advantage of exceptional pasture conditions and the highest cattle prices ever seen. Due to this, many producers are not supplementary feeding.

With regards to export hay, recent comments have come to light that there is a level of stockpiling by exporters due to disruptions into China. Therefore, this may impact the tonnes required for new season hay production.

The demand in the current market it is for quality product. This unfortunately impacts and heavily disadvantages the lower quality product in the market and will at this stage remain so for an unforeseen period.

The graph below identifies the tonnes traded in May 2019, 2020, and 2021. We can see a recovery in purchasing is occurring.

DAIRIES

The last of the “lower priced” Lucerne is gone. In February, Lucerne was delivered Darling Downs for approx. $350/ton. Now those in the market for Lucerne in that region are +$100/tonne. Some Dairies in SEQLD have taken advantage of 2019 Cereal hay during May, however, the supply of this hay is almost at an end.

NSW Dairies have not required much hay for the majority of 2021. The same ran true in May. There were minimal movements in the market. With some taking in lucerne as a source of protein.

Victorian and SA Dairies were the driver behind traded tonnes in May. The confidence in these Dairy industries continues to grow as milk prices remain firm. Many Dairies have been chasing high protein hay. This is still available and at good prices for those located in these Dairy regions. It is likely that Dairies in Victoria and South Australia will dominate the demand for the coming months.

FEEDLOTS

The utilisation of feedlots based on the March quarter numbers was 11% down base on the 5 year March quarter average, 69% vs 80%.

A smaller number of lot feeding operations have proceeded with their traditional top ups of product based on forecasted cattle movements and linking through to new season production.  Ration menus for some have continued to be revised based on price movements of all inputs/commodities. For some this has seen a very slight rise in quality Cereal hay input.

Without a doubt cattle prices and movements of stock continue to place high pressure on the margins of these operations. Not to mention the considerable reduction of export numbers, as sales to China alone have fallen 42% year on year. Other countries have taken up the gap in this Beef market to a degree, and they’re being extremely price competitive compared to Australian product.

Total number of Cattle on feed at the end of the March quarter remained just over the million head market mark despite the decrease of 43k head of cattle. QLD Cattle on feed decreased by just under 8% for the same quarter. This market will remain heavily impacted by the strong competition for feeder Cattle across the country. Despite all the current challenges long-term confidence remains high in the national feed lotting sector. Developments and capacities continue to be invested in, ready to take advantage of the herd rebuild as it progresses.

OUR CLOSING THOUGHTS

Despite challenges in the market, opportunities can still be found. Quality Hay and Roughage is the key to a successful sale. Value & quality remains a priority, you may get sick of us saying this but it’s exactly where the market is right now. Grain prices have remained firm despite the record crop 20/21 and the predicted bulk crop of 21/22. This is driven by export demand and high confidence within this sector. Despite this, quality Roughage is vital to the Beef supply chain in Australia. Our climate is variable, and these products are always required in time. As we expressed last season, quality storage is a must for hay production and it’s a worthwhile investment.

Please keep an eye on our weekly Feed Registry delivered straight to your inbox with a full list of hay listed for sale across Australia.

We understand the desire for market information, we are here and available to discuss market conditions at any time.

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