Hay growers are being urged not to panic sell in the wake of an unseasonal heatwave across south-east Australia.
The blast of hot weather has prompted many farmers to cut their crops for hay instead of waiting for the grain market, but Feed Central managing director Tim Ford said growers would be best to organise their cash flow and storage to avoid panic selling at harvest.
“Some crops that were intended for grain will go to hay, especially in Vic, but there’s no need to panic about marketing the hay,” he said.
Mr Ford said it wasn’t unusual for a lot of hay to be made quickly due to weather issues such as drought or frost, but there would still be a strong long-term market.
“Something like this happens most years, it could be drought it could be frost and the market always manages it; the key message is that the market will be there for the hay,” he said. “We always make hay within a 60-day window from around the start of October. Most of hay is made within a six-week period so this is not that unusual and it then typically sells in autumn.”
Mr Ford said, in Feed Central’s experience, all hay would sell over an annual cycle and farmers should carefully manage their sales to avoid falling prices.
Typically Australia makes between nine and 11 million tonnes of hay every year and Mr Ford said that was likely to be roughly the same this year.
There have been predictions that Vic’s hay production could increase by 20 per cent due to wheat crops being cut for hay, but Mr Ford said this wouldn’t be a problem.
“We can handle a 20 per cent increase in Vic’s volume of hay,” he said.
“There will be a lot of hay in the paddocks at the moment but overall there will be 11mt at best.
"Historically we have always absorbed that. It’s not a problem.”
Mr Ford said there was an upside for farmers who should aim to make the best of the current situation.
“The good thing is that drought produces very high quality hay,” he said.
“A quick, hard finish like this typically produces high quality hay; especially wheaten hay.
“Therefore farmers can be assured they will have high quality hay and it will sell over a 365-day period.”
Mr Ford said there could be a short-term impact on prices because many growers would sell hay to generate cash flow to pay bills.
“In the long term prices will rise and stabilise,” he said.
“This is why people shouldn’t panic sell and instead get their cash flow and shedding organised so they don't take a price hit in the short-term.”
Mr Ford said most farmers manage multi-million dollar assets and have the capacity to increase their overdraft and then sell their hay in a more managed and controlled fashion.
He said sheds were the best option for storage but hay caps and tarps are reasonable second choices.
Farmers should stack the hay in a high part of the paddock to avoid water and preferably in an area with all-weather access.
He said the changed conditions should make no noticeable difference to grain stocks, a tough finish within Vic has been factored into grain inventory projections for a long time now.
