THE increased area in hectares sown to crops for hay production is expected to put pressure on fodder returns this season.
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In 2015, hay and lentils offered the two best gross margins to SA croppers.
But both crops are unlikely to be as lucrative this season, on the back of increased plantings across the state.
Balco chief executive officer Rob Lawson said it was still early days when it came to hay prices for the 2016 season.
“There’s been no more than 5 per cent of the state’s hay cut and less than 1pc would be in bales,” he said.
“But overall plantings are up 10-15pc this year.
“And yields will be above average with the season we’ve had, so those two things together will put pressure on prices.
“Demand from the export market has increased, but the supply is greater than the demand.”
Mr Lawson said while demand from China was still buoyant, it had not quite reached the highs expected.
“There’s been a number of hectares in China move from corn silage to oaten hay,” he said. “So there is a considerable amount of domestic oaten hay in China. But the demand is still there, it’s just not increasing.”
Showing more potential for growth were Vietnam and Indonesia.
“There’s no domestic hay grown there, so as their dairy industry develops, we expect demand will increase,” Mr Lawson said. “They’re two markets we’re watching closely with high hopes.”
Mr Lawson said the wet weather and massive crops were likely to lead to quality issues in SA.
“I expect neutral detergent fibre will be up a bit, and normally the lower the better,” he said. “I expect water soluble carbohydrates will also be down a bit.
“It’s not to say with high yields you can’t make good hay, we certainly saw crops last year go 7 tonnes a hectare and still make the top grade.
“But I think every hay grower in the state will be watching the weather closely in the next month.”
While prices were set to be back, Mr Lawson said top grade hay at $200/t was not out of the question.
“It’s hard to say so early in the season, if there’s not a lot of top grade hay about the price could be even higher,” he said.
“It’s really early days, while prices will be down compared to last year, how far down is yet to be known.”
Australian Fodder Industry Association chief executive officer John McKew said the amount of hay produced nationally would be significantly up this year, with WA looking particularly strong.
“Domestically, demand is set to be soft, with the dairy industry experiencing financial pressures and also with strong home-grown feed reserves in most areas,” he said.
