Last winter called for more supplemental feeding than most ranchers might have preferred, as winter hay can be costly when supplies are tight. Fortunately, 2019’s hay market is forecast to bounce back from last year.
After a cold and wet spring brought a rocky start to crop progress, hay outputs were able to thrive and regain after the summer, Katelyn McCullock of Livestock Marketing Information Center told WLJ.
The past few years have seen very low hay stocks and this year’s hay market came off a fairly tight situation. The weather did not warm up very quickly and many areas experienced excess rain and wetness.
These factors led to a few things, McCullock said, including delayed cuttings or first cuttings skipped entirely. Weather had a big impact on yields as well. Some alfalfa seedings were drowned out in the Midwest from heavy rains. For those areas that were able to get their first cutting in, quality issues arose due to the limited number of days of full sunshine.
However, once the season progressed past June, forage production took off, McCullock said.
“We had a great growing season in the middle of summer, and production made up a lot of lost ground.”
October is one of the more critical months for objective yield date points, McCullock said. This year’s final report won’t be released until December or January, but October’s report is positive in that yields were able to catch up this year even with the cold and wetness factors. The forecast for the end-of-the-year report is alfalfa and other hay will be above last year’s yields.
Market prices
With hay being such a regional market, prices can vary vastly across the country. On a national basis, alfalfa and other hay trends have been driven by tight stocks early on, McCullock said. In some regions, volatility was an issue, but the overall theme was hay stocks being extremely tight and a price increase was seen at the end of the last marketing year.
In December 2018, alfalfa prices increased about $20 a ton until the end of the crop marketing year, and this year began at over $200 a ton. Since then, prices have come down as more forage production has come available.
“Now, one of the critical pieces for this hay market is one good year of production isn’t going to put you back to a normal stock level,” McCullock said. “It’s going to take a couple of years to get back to the long-term average price of what alfalfa and other hay is doing.”
Other hay experienced a similar pattern. Prices increased over winter and the crop year started with much higher prices than a year previous at about $30 more per ton. Prices have come down since then, but at $127 per ton, are still considered fairly high for other hay.
Over the last 14 years, alfalfa has posted prices at more than $100 per ton fairly regularly, $132 on an annual basis in the last 20 years. This year will trend more towards $127-180, McCullock said. Other hay has averaged just over $100 for the last 20 years but will be expected to reach $130-140.
Exports
The U.S. typically exports 3 to 5 percent of total hay production, the majority of which goes to six different countries: China, Japan, Taiwan, South Korea, United Arab Emirates and Saudi Arabia.
China is a major importer of U.S. hay, especially alfalfa, McCullock said. Trade tensions and retaliatory tariffs have driven China exports down by 40 percent in the first half of 2019. With 90 percent of exported hay going to only six destinations, any pullout is a pretty big deal for the export market, McCullock said.
Saudi Arabia has expressed more interest in the past few years and exports were up for the first half of 2019. Other markets have come in greater besides China, so overall, U.S. export volume is even with a year ago for alfalfa hay.
“If those additional markets hadn’t come in, we would have seen some big differences,” McCullock said.
In terms of other hay, China doesn’t purchase nearly as much as they do alfalfa, and the first half of 2019 has seen a 66 percent decline in total volume year over year. South Korea pulled back a bit this year but Japan, Taiwan and United Arab Emirates made up the difference, bringing total other hay exports to 103 percent of last year.
“Stocks are going to be the overwhelming driver over the export market, only because it is such a small percentage of production,” McCullock said.
The Pacific Northwest may see more volatility as they have a larger share in the export market.
The upcoming market
The general overview of the upcoming market is going to be based on stock levels and how tough of a winter it is, McCullock said.
“We’ve had a great summer in terms of forage conditions, so not much of the country has had to feed out additional supplemental hay this year, which is pretty different from last year.”
She continued that this year was going to be a year to build stock. While there probably won’t be particularly high stocks, if combined with a mild winter, stock levels will climb, prices will moderate and there won’t be as big of a rally of hay prices into winter like last year. — Anna Miller, WLJ editor
