In order to make a good guess as to what will happen with hay prices for 2019, it’s useful to look at what’s happened in the past. But the trade war with China is making things difficult to forecast. Low milk prices and struggling dairies continue to keep prices low. Below we have analysis on hay prices for 2018, and what we might be looking at for 2019.
Hay Prices in 2018
Mike Rankin’s analysis of hay in 2018 has a little bit of everything. His article this week appeared in Hay and Forage Grower. If you’re in the business of selling hay and weren’t thrown off by bad weather, last year was probably pretty good for you. Not so much for the hay buyer. And unfortunately, Rankin says things are likely to get worse before they get better.
To see examples of alfalfa and grass prices being paid FOB barn/stack for Friday, February 22, click here.
Looking at the USDA’s latest Agricultural Prices report, the average price of alfalfa and grass hay was much higher at the end of the year than at the beginning. Both hay types saw significant gains in December.
The average December Alfalfa Hay price broke a recent two-month downward trend and bumped $5 per ton higher than November to $180. That value is $31 over the December 2018 average price. The USDA report follows a previous one that indicated year-over-year December 1 hay stocks were down by 6.4 percent after being down by 12 percent in December 2017.
From December until spring when new crop begins to hit the market, hay values typically rise with a peak occurring in April or May. The highest average U.S. Alfalfa Hay price in 2018 occurred in May at $189 per ton. That was a $40 bump from December 2017. From December 2016 to a year later, the market value difference was $19 per ton.
In December of 2018, the states that saw the largest gains in alfalfa hay prices were Oklahoma (up $25 per ton), Iowa (up $18), and Pennsylvania (up $14). Arizona, Colorado, Indiana, and Michigan were also up $10 per ton.
The highest average Alfalfa Hay prices were reported from New Mexico ($255 per ton), Colorado ($235), Tennessee ($235), Pennsylvania ($231), Kentucky ($220), and New Jersey ($220). The lowest prices were found in North Dakota ($91 per ton), South Dakota ($107), and Nebraska ($115).
Rankin predicts that because of where the market stands and with lower hay stocks that it’s possible that we could see alfalfa hay prices hitting the $200 per ton mark by springtime. The last time we saw alfalfa that high was in November of 2014.
The price of Other Hay moved $3 per ton higher in December to $140. That is $21 higher than last year, and the highest monthly average we’ve seen since April 2015. Most years, the price will peak in the spring and then decline until winter. This year, there was no price decline in the spring. Prices pretty much rose steadily throughout the entire year.
The highest prices for Other Hay were reported in Colorado ($235 per ton), New Jersey ($210), Pennsylvania ($205), and Arizona ($200). States with the lowest reported Other Hay average prices included North Dakota ($76 per ton), Nebraska ($78), South Dakota ($90), and Kansas ($95).
Rankin predicts other hay prices to climb through the spring. Record prices above $157 per ton are a possibility this year.
Getting a little more specific, Lynn Jaynes of Progressive Forage took a look at western hay in her article “Western Hay Prices- Where we’ve been and where we’re going.” To start off 2018, western alfalfa and hay prices were up. But prices flipped between the months of May and October. Jaynes provides some explanations of why that would be happening.
She listened to Seth Hoyt speak at the California Forage and Alfalfa Symposium in Reno, Nevada, and Hoyt believes that western hay prices are low because of the trade war with China, struggling dairies and very low milk prices.
Western Hay Prices 2018
2018 was a good year for western growers, as afalfa hay acres were up 4%. Western hay markets have been somewhat tight. Alfalfa percentages in dairy rations are sliding. Almond hull prices are low, and many diaries are utilizing it as an alternative. In 2005 about 11.25 pounds per head per day of the diet was alfalfa. In 2018 alfalfa rations are around 7 pounds per head per day.
Hoyt describes hay buying as “abnormal.” It’s been the same way for the last couple of years. Many western dairies are only buying short-term hay supplies, as they don’t have enough cash for long-term supplies. Dairies are struggling to survive and that’s one factor keeping hay prices down.
The trade war with China has also affected alfalfa exports. They’ve dropped 33% since the trade war began.
“This was a big deal,” Hoyt said, “because in 2017 around 45 percent of alfalfa hay exports from the West Coast went to China.”
Another notable characteristic of 2018 western hay was the demand and prices of fair quality feeder/dry cow alfalfa hay. Not as much fair quality hay was produced, so demand for it was higher.
Western Hay Prices for 2019
Hoyt says there are two factors that could help improve hay prices for 2019- higher milk prices and a resolution to the trade war with China. He tempers that prediction, however.
“It is years like this that made me stop trying to predict where hay prices will go in the future,” Hoyt said.
He does say that demand for hay in the Middle East has picked up, especially in Saudi Arabia. We’ve heard that irrigation on larger alfalfa farms there will be stopped, therefore increasing demand for western US hay. There’s also been growing demand for hay from UAE.
Don’t miss Ag Nook’s related article titled, “Hay Nitrates Cause Cow Deaths“.