Quality is key to Asian hay trade

High-quality export oaten hay is expected to fetch up to $200 a tonne this season, according to Hay Australia managing director Andrew Bolt.

"There is a very good demand for higher quality classes and adequate supply," he said.

Mr Bolt said demand from Japan for high-grade hay remained consistent, the Chinese market was looking for more this season and Korea and Taiwan were steady buyers.

Rob Pauley, manager of Brookton-based SP Hay, said quality would be a key factor this season.

"Hay probably needs to be in the top three grades for a good return," he said.

Lower grade export markets have suffered, with prices for lower gradings likely to be $100-$120 a tonne.

Partial market loss in this sector was a result of mainstay Japanese buyer, Agura Farm Co, declaring bankruptcy after the tsunami and ensuing nuclear crisis.

The Wagyu beef producer was the biggest user of lower grade Australian oaten hay.

Agura Farm Co experienced a loss of market confidence after it fed cattle with caesium-contaminated hay. It has scaled back its 40 farms to just 10, reducing Japan's calf production rate by 10 per cent.

Mr Bolt said buyers had been reluctant to buy Japanese beef because of food safety concerns and premiums had been eroded.

"There is a lack of confidence and demand for Japanese beef," he said.

The US domestic hay market remains strong because of droughts in Oklahoma and Texas but US farmers might be capable of supplying their own needs.

There is the option of substitution of different feeds at the lower end of the hay market, so oaten hay can be replaced in the ration.

Supply of WA export hay has been good because late rains resulted in a strong finish to crops throughout eastern and south-west regions.

It is hoped with a lot of hay now on the ground, forecast rain does not ruin export-quality hay crops.

"We're hoping it won't affect cut hay before it makes it to the bale," Mr Bolt said.

The inclement weather is also expected to affect WA's domestic hay markets.

A possible influx of lower grades of hay and high supplies could dampen price expectations.

Glenbrae Hay manager Richard Noakes said he expected domestic demand for oaten hay in the South West dairy and feedlot markets to remain steady.

"Hay sales are still good, there is a lot of hay around though," he said.

"The season is looking good for domestic supply which will result in cheaper prices.

"We expect to see a later demand as sources dry up around April, May and June next year."

Kimberley stations have also shown an interest in southern-grown hay as they face the task of feeding animals left on-property as a result of the ban on live cattle exports.

"People want to only muster once, so we have had inquiries from those who have yarded and want to feed oaten hay to keep weights up until sale," he said.