AUCTIONEERS COMMENT

28 February 1997




AUCTIONEERS COMMENT

Simon Pallett

(Dreweatt Neate, Newbury)

EVERYONE has heard of the pig cycle, but just as evident is a straw cycle, says Simon Pallett of Dreweatt Neate.

On offer at next weeks (Mar 6) forage auction at Newbury is almost 4000t of forage, nearly twice the usual amount. It was a similar story in January, when 6000t was catalogued.

"Large areas of straw were baled last summer," says Mr Pallett. "It was the result of the high prices in the previous year when at a yield of, say, 2.5t/ha (1t/acre), barley straw was adding £125/ha (£50/acre) to the gross margin.

"The large acreage baled last summer, together with high yields, left barns full. Before long outside stacks began appearing, particularly of wheat straw."

Then came the BSE crisis. Farmers have bought on a hand-to-mouth basis; dealers have been less bullish. Much of the winter is over and large quantities remain unused.

Such factors will discourage farmers from baling this year, says Mr Pallett. "Higher fertiliser prices may also encourage them to chop and incorporate, helping to reduce input requirements.

"If people cant get the price they want, they will save it and chop behind the combine this summer."

And if yields are disappointing, we could soon be back in a shortage situation, he says. But those left with straw stacked outside are in a difficult position. "With the exception of the small amount useful for mushroom composting, most is unsaleable. For this reason we have not included any such entries in the March auction."

Despite the straw cycle, there should always be some profit for farmers making small bales of good-quality barley straw.

"And the discount associated with big bales has become less marked as more farmers are able to handle them. Square ones remain far more popular than round ones, as they are easier to stack and move."

Overall this season, barley straw in small bales has been steady at about £35 to £40/t (£25 in big bales), says Mr Pallett. Wheat and oat straw has been changing hands for about £10/t less.

Hay, meanwhile, has been about £100 for farm use, with horse feed samples making over £120/t.

Horse owners are an important feature at the Newbury sale. They take bedding straw, too, preferring long samples, avoiding that which has passed through an axial flow combine.

"Most forage is headed for Wales and the West Country. Samples located on the west side of the Berks/Oxon/Hants/Wilts counties from where the entries come, typically make the highest values, therefore.

"It might cost £15/t to take hay to Cornwall. There is the time element, too. People want to drive to the farm, load it and get home in a day. Overnight stops add time and cost."

With cattle in such areas possibly housed until late April, the weather – and expectations about it – are now crucial to the prices for the rest of this season, says Mr Pallett. Overall, he reckons prices at the coming auction will be similar, or slightly down, on the January offering.

"People certainly wont be buying speculatively. Farmers will be buying forage to use it fairly soon, and dealers will be filling orders."

Of the 70-plus people expected to attend the auction, a handful will be vendors. Paying between 5% and 10% as commission to sell it, they will be keeping their fingers crossed, keen to see it make a good price.n

Simon Pallett: Outside straw stacks are virtually unsaleable.

The next question is how much will farmers bale this summer.


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