Strong summer pasture growth lowering input costs for dairy regions

In its latest Production Inputs Monitor, DA said many farmers had been able to reduce their reliance on purchased feed, taking up opportunities to grow their own and conserve fodder.

Dairy Australia industry analyst Isabel Dando said the reduced demand had seen prices dip, or remain steady, for the past few months.

"Looking ahead to autumn and winter, demand is starting to increase from farmers, particularly in south-west Victoria and South Australia, looking to secure high-quality feed for the cooler months," Ms Dando said.

"For grain prices, there are little signs of upside even over the longer-term, with surplus global supply and quiet international demand likely to continue weighing on global and domestic prices."

She said low rainfall over autumn could see increased pressure on both fodder and water prices.

It comes as DA recently released figures showing milk production was growing again.

"The price of both cereal and protein hay has come down from last year, due to improved availability and supply of tradeable fodder, compared to the challenging conditions and low volume of fodder produced in early 2023," she said.

"Over December and January especially, demand fell as above average rainfall led to favourable pasture growth and increased opportunities for home grown feed production and conservation across southern Australia."

Drier conditions were likely to apply upward pressure on prices, although across the country, cereal hay prices currently ranged between steady and 5pc below January, with minimal price movement since November.

In February, cereal hay was selling at $288 a tonne, down 13 per cent on 12 months ago, while protein hay cost $368/t, a drop of 22pc.

Grain fell by 14pc, to $33/t, while there was slight lift in the price of fertiliser, 4pc, to $538/t.

The monitor reported temporary water prices remained historically low across northern Victoria and the Murray Irrigation system, although were slightly higher than this time a year ago.

Water levels in all monitored storages fell from January, on account of warmer temperatures and a return to drier conditions for parts of Victoria.

"Hume Dam, Waranga Basin and Lake Glenmaggie showed the largest declines, falling 10, 14 and 16pc respectively," Ms Dando said.

"Hume Dam is at its lowest capacity (74pc) since June 2021."

Seasonal determinations increased in the Murray, Goulburn, and Loddon systems, with the benefits of rainfall in early January still being realised.

"This rainfall has helped to meet demand, bringing higher than expected flows into and minimising releases across the Murray and Goulburn systems, Ms Dando said.

"Temporary water prices fell for a fourth consecutive month across both northern Victoria and the Murray Irrigation system, falling another 47 and 35pc from January respectively."

While prices were currently well above last year, they did remain historically low across both regions.

In northern Victoria, the average price for water was $31/megalitre, compared with $18/ML last year.

For the Murray Irrigation System, the average was $16/ML, compared with $7/ML last year.

"As such, and with the return of drier conditions and warmer temperatures in some areas, from last month, the volume of water traded jumped 24pc across Northern Victoria and 41 cent in the Murray Irrigation system," Ms Dando said.

Summer was wetter than usual for many areas, contributing to this summer's rainfall being the third highest on record during an El Nino event, she said.