Low wheat and hay prices continue to challenge grain growers

05.09.2016

Hay and fodder producers are feeling the pinch of the dairy crisis with demand and prices remaining low.

The combined effect of rain, and farmers cutting costs, has prompted falls in how much feed dairy farmers are buying.

Australian Fodder Industry Association chief executive John McHew said he was not expecting conditions to improve until the next harvest.

"I think a lot of dairy farmers are holding off at the moment," he said.

"If they don't need to purchase, they'll make as much use as they can of home-grown fodder or grass, and they're certainly out of the market at the moment.

"There hasn't been much good news for dairy farmers, and fodder is always a significant cost into the dairy industry.

"What's working in their favour, and there isn't a lot that is to be honest, is that we've had good rainfall and there is optimism there for strong pasture growth."

Mr McHew said oaten hay around the country cost about $200-$220 a tonne delivered, but that varied depending on transport costs.

"But we have seen a softening in prices over the past week. People are waiting for the new harvest to start being produced," he said.

Wheat faces price struggle due to oversupply

It is a similar story for wheat prices, which are at 10-year lows on the futures trading market.

AvantAgri analyst Malcolm Bartholomaeus expects farmers will be trying to store as much grain as they can until prices turn around.

"The Chicago Board of Trade index closed last week at a level that we really haven't seen since September 2006," he said.

"The December contract closed at $193 a tonne Australiam, which translates to $230 a tonne for new-season APW wheat."

Mr Bartholomaeus said there was a lot of grain around and that was suppressing prices.

"Global grain supply has really exploded in the last few years and we haven't had a production issue for some time now," he said.

"In the absence of that, global stocks have grown and have been steadily increasing.

"Anyone that's sort of been carrying through good income levels or grain from previous years will certainly have a strong incentive to be patient with their marketing.

"So yes, I am expecting a lot of grain to be warehoused in the bulk handling system, as well as on-farm storage to be filled."


abc

Readers choice: TOP-5 articles of the month by UkrAgroConsult