Hay prices are slowly edging up as the fodder market tries to get a better handle on supply and demand dynamics over coming months in the wake of increasingly dry conditions nationally.
New crop hay and silage is slowly starting to hit the market, but it is failing to stop prices inching higher.
Prices in key areas of demand, such as the Darling Downs in Queensland and the North Coast in NSW have edged up to as much as $345 a tonne for cereal hay according to the most recent Australian Fodder Industry Association fodder report.
The report said demand was continuing to be driven by the ongoing dry conditions through southern Queensland and much of NSW.
Local supply will not be sufficient to meet demand, with shedded old-crop product and a small amount of recently made new crop hay also moving into the region.
The low livestock prices are having a complex impact on fodder pricing.
On one hand, some livestock producers are considering destocking, lowering demand, but the other side of the equation is that the low saleyard prices continue to keep larger herds either on farm or in feedlots which is leading to higher fodder requirements and a continuing tightening of supply.
The North Coast is becoming increasingly likely to require significant volumes of fodder from outside the region to meet demand, with some failed cereal crops in the region unlikely to be bulky enough to make fodder.
Issues with rising diesel prices will mean end users will be keen to get product from as close as possible, with AFIA reporting good trade out of the Riverina.
In Victoria's Gippsland, usually a large fodder producing region, the west of the area remains relatively damp, but irrigation has become necessary in the east to keep pastures going.
AFIA reported some demand for fodder starting to emerge in east Gippsland, but most sales remain into dry parts of NSW.
South Australia could be a key source of fodder with AFIA reporting that central SA hay crops continue to show good growth and potential.
Some early hay cutting was started last week with crops that were sown early and reports were that the hay coming off was of good quality.
The Bureau of Meteorology (BOM) eight-day forecast was for very little rain across virtually all of Australia, with a smattering over Gippsland.
This will place existing pastures and struggling grain crops under further pressure and potentially put upward momentum into fodder markets.