Northern grain supplies are set to tighten even further as farmers across southern Queensland and northern NSW start cutting crops for hay rather than seeing them through to harvest.
Strong hay prices and the lack of soil moisture to finish crops has made it an easy decision for farmers, so long as the crop has enough vegetation to warrant the expense. Cereal hay prices eased in recent weeks as new crop supplies become available but it's still demanding upwards of $500 a tonne delivered into the Darling Downs and northern NSW.
Unfortunately, the dry season means that many cereal crops lack the volume of vegetative matter to justify cutting for hay. Farmers in southern NSW and even parts of Victorian may even consider cutting cereal and canola crops for hay without another rain in the coming weeks.
Many central NSW farmers have already made the decision to let sheep where crops weren't large enough to justify cutting for hay.
Hay demand is expected to remain strong through the season with the record feedlots numbers and the absence of local silage.
Southern Queensland grain prices remain firm, with concerns for crops through south eastern Australia. New crop barley bids were $8 higher at $375 delivered into the Darling Downs while stock feed wheat was steady at $405.
ASX wheat futures rallied above $340/t late last week on forecasts for a hot, dry spring. Hotter and drier than normal weather is set to continue across most of Australia for the coming three months, according to the latest Bureau of Meteorology seasonal outlook.
The bureau said the positive Indian Ocean Dipole was the major factor influencing the drier than normal conditions.
The bureau said it expected the positive IOD to break down in December.
Global grain market influences remain negative as large global supplies and sluggish demand weighs.
The International Grains Council raised its estimate for world wheat production, citing larger crops in the United States, the European Union, Canada and Argentina. IGC raised its forecast for world wheat production by 1 million tonnes to 764mt, sharply up on last year's 733mt.
IGC trimmed its forecast of global wheat trade was cut by half a million tonnes after a slow start to the Black Sea and EU but is still expected to increase by 2 per cent from last year.
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