National Hay Market Report March 2021

KEY POINTS

• February demand developed with sellers of hay and straw looking to find market equilibrium.
• Lucerne production now in full swing, starting 4^th and 5^th cuts and prices beginning to firm.
• Dairies and Beef Graziers are seeking winter feed now, high quality Vetch is moving with limited supply.
• National herd rebuilding is well underway, and as a result, slaughter numbers are expected to slip, combined with export numbers still declining.
• Caution must remain around pricing.
• Feed Central will be offering a “recently sold” segment in its weekly “feed registry” to help buyers and sellers gauge market conditions.

OVERVIEW

SUPPLY

CEREAL HAY & STRAW

Currently, Feed Central has 150,000+ tonnes of fodder listed, visually graded and feed tested. Of this, 91,000 tonnes are of at least FCA quality or better, with the remainder being B grade or lower. Supply numbers are almost final and Feed Central has made some observations on the quality of fodder available, visible in “Figure 1″ below. “Figure 1” is a year-on-year table that compares the averages of Metabolizable Energy (ME), Crude Protein (CP), Relative Feed Value (RFV), Acid Detergent Fiber (ADF) and Neutral Detergent Fiber (NDF).

Majority of hay produced in 2018/2019 was of extreme quality, but we can see that most cereal hay produced in 2020 is of a much lesser quality by feed test comparison.

Buyers must be wary of hay they purchase in 2021 as the variability across the market is extreme. There are still two seasons of product available, with some remaining 2019 & 2020 cereal hay available in the market.

The availability of cereal hay is ample; however the levels of quantity vs quality is to be closely watched. Roughage/Straw is in a similar situation, with one major difference: larger quantity remains un-shedded and is continuing to be exposed to the weather.

From enquires made, it is understood that Summer Forage Hay production will be down this year. Many growers are concerned about finding a market for these products and have opted to graze themselves, or not to produce.

Figure 1
Denote: Numbers relate to all cereal hay samples processed through Feed Central’s laboratory, Charlton.

LEGUME & PROTEIN HAY

DEMAND

For the first half of February, Feed Central experienced a level of normality in fodder demand. Some feeders stepped into the market looking for top-ups of Straw and Cereal Hay, while backgrounding and dairy operations took advantage of competitively priced Lucerne options. Lucerne purchasing in February 2020 was the second-highest in the last six years, due to competitive pricing and availability of the product.

When we look at average pricing for February, trade year on year; record prices were experienced for 2019 & 2020. From 2016 to 2018 average prices were no more than $5/t up / down, compared to February 2021 result of a $30/t up. See “Figure 2” for February year on year traded.

The continuation of favourable seasonal conditions for a majority of NSW and VIC, as well as parts of QLD, has meant that many producers are holding back stock they would otherwise slaughter. Our year-on-year slaughter numbers are expected to fall 3% according to MLA; this directly affects feeding operations, with less occupancy in feedlots despite a rapidly growing feeding capacity.

It is great to see the majority of Australia continue to experience favourable weather conditions. The BOM released a statement that although we are currently past the La Nina’s peak, influences are likely to continue to affect well into Autumn. This information as well as February’s rainfall suggest that it is unlikely that fodder pricing will climb as we enter Winter and demand will stay relatively low.

Figure 2
Graph information provided solely from Feed Central information.

Figure 3
The Bureau Meteorology

GRAZIERS

FEEDLOTS

DAIRIES

Reduced feeding costs and some increases in milk pricing has resulted in increased optimism within many parts of the dairy industry.

South East Queensland has again missed out on February rain with some of these Dairies taking advantage of the cheaper Lucerne options currently available.

In New South Wales, some Dairies have stepped into the market and purchased parcels of Lucerne to ensure cover for Winter feed.

Victorian Dairies are now in the market for Vetch. There are limited numbers of high-quality lines of Vetch available due to tough curing conditions in 2020. Victorian Dairies have an abundance of feed options within their regions but need to be cautious with regards to quality.

THE EXTRA WORD

We have switched over seasons while at the same time many still have pasture growth or dry feed in abundance, so we must not be fooled into thinking this seasonal switch will automatically force a complete change in mindset on purchasing feed. On both sides of the market, the regular talk and predictions around the Autumn Break will begin.

On pricing, is there room for downward price movement? Based on levels of ‘quantity’ verses ‘quality’ maybe not. Are we suggesting the bottom of the price cycle is here, maybe? Nor in the current market would we expect, or would end users wish to see prices increase, this more likely would stall purchasing interest very fast and see more hand to mouth type purchasing patterns. Or worse still, the end user continues to take advantage of high cattle prices and moving them on. Unlike the regular expected buyer patterns, we would normally see start to switch on e.g. wishing to fill a shed with quality feed for security. Should buyers be considering this now, absolutely!

Please keep an eye on our weekly Feed Registry, the Feed Central team understand the desire for market information. Feed Central will now be supplying our mailing list with a weekly “recently sold” segment. This is intended to help growers gauge current market movement and trends.

CONTACT OUR TEAM