Demand for feed grain set to continue

Demand for feed grain set to continue


Grain
Hay trucks will again be a common sight on the highways across eastern Australia this year.

Hay trucks will again be a common sight on the highways across eastern Australia this year.

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In spite of the high cost and limited availabilty of feed grain, livestock industries in northern Australia will continue to buy grain.

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GRAIN and fodder availability is unlikely to be much better in the upcoming 12 months than it has been over the past year, but feeders are expected to eke out sufficient supplies to keep going.

Analysts say that in the current environment lot feeders' major issue will be sourcing cattle, rather than grain.

"The national kill figures have showed slaughter rates of over a million head a quarter for some time now," said Australian Crop Forecasters (ACF) analyst James Maxwell.

"That is not going to be sustainable in the long run, at some stage the focus has to turn to restocking but the north is still very much in drought so that won't be happening in the immediate future."

He said the demand for grain showed feeders were still in the black, in spite of high grain prices and difficulties in sourcing supply.

"As long as they can make money from feeding the grain, even at elevated grain prices then the demand will continue."

In terms of grain supplies, Mr Maxwell said the industry was resigned to yet another poor season in the northern cropping belt.

"At this stage you could maybe lock in 3.8 million tonnes of wheat production for NSW and Queensland, which is well down on average and would not be enough to meet demand in that region, which sits at around 5.8m tonnes."

However, Mr Maxwell said one potential positive was the prospect of an improved season in southern Australia.

"It is early on, but you'd have to say there is more potential in the south this year than last year."

"Large parts of Victoria and South Australia are in good condition and southern NSW is not too bad.

"Last year there were pockets of decent crop, primarily in places like Victoria's Western District but it was still a well below average year for southern Australia, although not as bad as further north."

Mr Maxwell said he expected northern grain users to be able to source grain out of Victoria and South Australia and continue to be able to get shipments in from Western Australia.

"The pricing structure remains that the east coast end users can compete against grain exporters for stocks and with another good year forecast for the Black Sea region, which is a key competitor into the same export markets as WA you would expect there is a limit to how high export values out of WA will go."

AFIA chief executive John McKew says fodder stocks will again be in short supply this year.

AFIA chief executive John McKew says fodder stocks will again be in short supply this year.

On the fodder front, Australia Fodder Industry Association (AFIA) chief executive John McKew said stocks were virtually exhausted and with strong demand from both the lot feeding and dairy sectors tipped to continue, he said fodder supplies would once again be at a premium.

"If anything it could be even tighter than last year, there are a lot of people planning to make fodder, but all reserves were virtually exhausted last year so that means it would need to be a massive production year to keep up with demand."

He said there had already been a curveball from southern Victoria, with hay users running through their supplies earlier than anticipated.

"The year is shaping up alright, but it was a record dry start to the year which saw people using more hay than they expected, and then it turned around really quickly and got wet.

"There wasn't much time in between to kick feed along before it got too cold, so there is still short-term demand from that south-west Victoria area."

He said oaten hay was nominally currently selling at around $400-500 a tonne but this was largely a price indication only as finding supplies was difficult.

Instead he said many end users were turning to straw to provide fibre and roughage to feed rations.

"There was a lot of cereal straw baled where stubbles were thick enough last year and there is good demand for that, while others are turning to novel feedstocks such as rice straw with reasonable success."

Mr McKew said he expected fodder stocks to continue to move the vast distance from Victoria and SA to Queensland once again this year, in spite of the massive freight costs.

"All indications are that there will be continued demand from the northern livestock industries for fodder and there isn't likely to be too much produced in their local area, so in spite of the big costs it will make its way up by road or rail."

Mr Maxwell said grain consignments would also move overland.

"From Victoria it will mainly be by road up to northern NSW and southern Queensland, while a fair bit of South Australian grain could move up by rail."

"If we see the southern potential come to fruition then you would expect that the reliance on WA grain will ease and we'll see shipments slow, you'd think they will still be coming across, but maybe at a rate of just one ship a month rather than the current pace."

He said with a poor sorghum crop, white grain would be the focus for virtually all feeder industries.

"For beef and pigs there is reasonable scope to switch between grains or least the make-up of the feed mix, while poultry are a little more fussy, but given old crop sorghum is virtually all sold it will be wheat and barley dominating feed rations."

He said he thought dairy demand for grain would be down, in spite of the recent improvement in milk prices as there had been consolidation within the industry over the past 12 months, while he expected demand from the pig sector to fall as well.

The steadily expanding poultry sector, on the other hand, is likely to want more grain as it continues to exploit its position as the cheapest mainstream meat.

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