What’s the latest on the hay market? It depends on where you live. Weather has had an impact on stocks in some regions of the country. Weather events have also had an effect on exports, but not as much as the trade tariffs with China. Overall, hay prices are down from September, but are holding significantly higher than a year ago. We’ve staked out all the latest factors affecting US hay markets- read on to learn more.
We’re at an interesting place on the calendar, according to Dave Natzke of Progressive Forage. He says that it’s a good time for us to look back at past production, present stocks, and future markets.
During October through February we normally see the highest hay exports for the year. But right now, Natzke says, the export markets are causing many to worry. The trade tariffs with China have slowed shipments. In addition, typhoons in China, South Korea and Japan this fall have also caused export delays.
Looking back to the most recent USDA export estimates, alfalfa exports dropped in October, mostly due to tariffs on sales to China. Total shipments are currently at 197,718 metric tons (MT), and significantly behind last year’s record-high pace. Total alfalfa exports to China are are the lowest they’ve been since January 2014, at 40,761 MT. However, October exports of other hay are somewhat improved. Sales to Japan (62,241 MT), South Korea (32,259 MT), and Taiwan’s (11,696 MT) have all increased.
The most recent USDA Ag prices showed alfalfa hay at $178 per ton in October. That’s down $2 from September, but still $25 higher than the same time last year.
Despite the lower overall national average, October average alfalfa hay prices rose $10 per ton or more in seven states compared to a month earlier, led by Iowa ($26) and Minnesota and Pennsylvania (both up $18 per ton). Those gains were offset by declines of $20 and $15 per ton in Arizona and Oklahoma, respectively.
Compared to last year, alfalfa hay prices were up $50 or more per ton in Colorado, Oklahoma and New Mexico. New York on the other hand, saw a $44 per ton drop since last year.
High monthly alfalfa hay prices were in New Mexico ($230) and Kentucky and Colorado (both $215), and were at $200 or more in Oregon, Pennsylvania and California. The low price for the month, at $85 per ton, was in North Dakota.
The US average price for other hay was $132 per ton, which is slightly up from September and $12 more than last year. Regionally, October average prices were higher in the East and Midwest and lower in the Northwest and Southwest.
Highest average prices for other hay again hit $200 or more per ton in Colorado, Arizona and Oregon. North Dakota and Oklahoma saw monthly lows of $63 and $72 per ton, respectively.
Both Wisconsin and Iowa are seeing higher demand for high quality hay- and not much is available. Prices in Kansas, Missouri and South Dakota remain steady, as winter weather means many farmers are feeding more hay. Generally, lower quality hay has been discounted.
The East and Other Regions
In the Northwest, hay demand has been moderate to steady. In the Southwest, demand for high quality hay increased as many prepared for winter storms. There’s a lot of low-quality hay on hand. In the East in Pennsylvania, there were too few alfalfa sales for a market test. Blended hays and small bales were higher.
Stocks and Weather Impacts
Pennsylvania experienced an extremely wet year. Russ Quinn of DTNPF says that has had an impact on hay supplies and prices in the East.
DTN Senior Ag Meteorologist Bryce Anderson said the northeastern part of the U.S. “was off the charts” on precipitation last year. Pennsylvania, for instance, was from three to five standard deviations above the 1977-to-2017 average, which in statistics is outrageous precipitation, he said.
Some farmers in Pennsylvania have reported hay production to be one quarter of typical amounts. This has caused high demand and higher prices there.
The percentages of hay and alfafa-producing areas experiencing drought is the lowest it’s been since the spring of 2017.
Over the past month, drought areas of South Dakota, Montana and upstate New York dissipated, but dry conditions expanded in northern areas of Nevada and California.
Around 11% of US hay-producing acreage was located in areas experiencing drought at the beginning of December. About 18% of alfalfa hay-producing acreage had drought conditions. This is largely unchanged from the previous month.
Ag Nook’s latest post titled, “Hay Yields, Production and Stocks Down“, analyzes the USDA’s recent Hay data.
Dairy Cow Numbers Decreasing
Natzle says the US diary herd size is dropping, according to USDA’s September estimates. Numbers totaled 9.367 head, which is down 32,000 from a year ago and the lowest number since February of 2017.
Income margins are expected to remain steady through June 2019. September U.S. average dairy income margins rose above USDA Margin Protection Program payment trigger levels.
The adverse economic conditions and herd liquidations continue to apply downward pressure on prices paid for dairy replacement cows. Preliminary October 2018 U.S. quarterly replacement dairy cow prices averaged $1,230 per head, $380 (24 percent) less than October 2017 and $890 (42 percent) less than the latest peak in October 2014. Average prices could be even lower, if not for a lower-valued portion of liquidated herds being sent directly to slaughter instead of being offered on the dairy replacement market.
Despite the dropping dairy cattle numbers, many hay market regions reported improved dairy activity.
In a related story from Ag Nook, learn how to Cut Down Cattle Feed Costs with these Tips.
It appears that the biggest concern to most about the hay market are exports. They’ve dropped since the Chinese trade tariffs. Stocks are varied, depending on location. Many areas are experiencing increased demand for higher quality hay. Fewer areas are experiencing drought, and dairy cow numbers are decreasing which may later have an impact on hay markets.