If you're not confident about Dairy for next year, consider the following facts
- By: "Farm Tender" News
- Regenerative Ag & Carbon Farming News
- Mar 13, 2019
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Allocation facts:
1. Average inflows will see 100% allocation next season.
2. Below average inflows will see 47% allocation in the Goulburn system and 58% in the Murray system.
3. Extreme drought will see 20% allocation in the Murray system 18% in the Goulburn system.
Take home message:
Manage for the average and it's likely that it's 100% HRWS for next year.
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I've said before this is a demand-driven water price and if fodder drops then the water price will drop very quickly. Irrigated horticulture is only 15% of the system usage, so it's not the big almond industry driving this.... it's feed corn demand.
Livestock facts:
1. Sheep numbers nationally are projected at 65M against historical flock peak of 220M.
2. Beef numbers are around 10-15% off the herd average.
3. Dairy is down mostly in the irrigation districts.
So average rain crashes fodder markets through low demand.
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Feed facts:
1. An average season in NSW creating some growth will then see a market drop in fodder values as producers leading to a return to average prices for fodder from the Spring of 2019.
2. Drop in fodder/grain price will see a sharp decline in corn plantings dropping water demand and the sales water price.
2. Global wheat values are down to $4.53 US cents bushel. Equates to USD166/ton or $231 AUD ton for APW delivered port. So you can generally take $50 per ton off for feed wheat Northern Vic (-$30 freight and -$20 difference between feed and APW). So wheat price parity is currently $180 ton GV for next year.
Milk price:
Global milk price is up 23% since it bottomed out on the 20th of November 2018. Competition for supply will drive above average prices being offered for Australian dairy farmers (above what it would normally be based on world price).
Conclusion:
If you manage to the average and accept the forward market prices. The 2019 season sees low feed prices, low grain prices a return to average sales water values and historic strong milk values.
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