Although hay stocks nationally were only down about half a percent in USDA’s latest hay report, some major hay-producing states’ stocks were down significantly due to drought. Stocks are likely going to remain very tight until this year’s first cutting, according to Livestock Information Center (LMIC) Director Katelyn McCullock.
Colorado saw significant reductions in hay stocks of about 15 percent; Missouri, a very large hay-producing state, was down 13 percent; New Mexico was down 36 percent; South Dakota was down 7 percent; Oregon was down 16 percent; and Kansas was down 6 percent.
McCullock told WLJ one thing in particular analysts are keeping their eye on is snowpack and how much snow is coming this winter. Most states who rely on the moisture from the snowpack have seen below-average levels in the mountains so far.
“That’s something that could potentially be a problem once it starts to warm up—what sort of soil moisture is available for these crops and drought-tested areas to start regrowth and enable good forage production,” McCullock said.
She added the state of snowpack is potentially going to be a multi-year event, because if there is not enough moisture this year, then it will be a lot harder for some areas to come back and that will impact what kind of hay will be used next year.
McCullock noted there was a slight acreage bump in the 2020-21 marketing year for other hay, but it wasn’t enough to offset the declines in yield, and production for other hay is down compared to last year’s levels. Alfalfa supplies are also tight this year from loss of acreage as well as declining yield. Drought isn’t as big of a factor for growing alfalfa as the acreage tends to be on irrigated pastures, but alfalfa production was still down 3 percent compared to a year ago.
The drought did lead to more hay being fed to help with pasture carrying capacity, which helped decrease the amount of cattle liquidation needed.
New seedings for alfalfa were reported down, so higher alfalfa prices can be expected for next year, especially in the first half of the year. This could be made up by better yields, but prices are likely to be steady to higher in the 2021-2022 marketing year from an acreage perspective, McCullock said. Also from an acreage perspective, 2021 was the lowest number of harvested alfalfa acres since 1974.
“I don’t see any price relief for hay—for other hay or for alfalfa—this winter ahead of any type of new harvest,” McCullock said.
“One other thing that’s happening, that sometimes gets wrapped up particularly with alfalfa pricing, is the price of other commodities,” McCullock added. “Alfalfa is a little more correlated with things like corn and soybeans, and they have staged an unbelievable rally in the last several weeks.”
She noted because of the price rallies, it’s going to be difficult for alfalfa prices to come down—not just from a fundamental standpoint, but also from the entire feed complex being much higher than a month or two earlier.
“I think it’s going to be hard to find hay, even if you’re willing to pay for it,” McCullock said.
She added that LMIC has heard reports of ranchers baling other forages and grazing a lot more crop aftermath to extend their forage carrying capabilities.
Hay exports
In general, the Western U.S. is more export-focused for hay than the rest of the country, McCullock said. Most of our hay exports go to five destinations: China, Japan, South Korea, Taiwan and the United Arab Emirates (UAE) for other hay; and lately Saudi Arabia has jumped into the alfalfa market in the past two years for alfalfa hay, in addition to the aforementioned countries.
Many of our export markets didn’t pull back after recent price increases—similar to the 2013-2014 drought when prices were very high but a strong export market was still noted. Through the first three-quarters of 2020 compared to the year prior, total alfalfa exports were up 6 percent on a quantity basis and other hay exports were down about 2 percent.
China has been an increasingly larger buyer of alfalfa; for 2020 their exports were up 57 percent. Japan usually imports a large share of alfalfa as well, but was down about 8 percent in 2020. However, Taiwan saw an increase of 32 percent and South Korea an increase of 1 percent, and Saudi Arabia and UAE had significantly lower alfalfa exports.
For other hay exports, China purchased 65 percent more than the year prior and Japan was also up 7 percent. The remaining big export countries were significantly down, especially UAE at 43 percent lower, which tends to jump in and out of the market more.
With the new Biden administration, we can expect some trade deal reworkings which could have an impact on the hay export markets, but until those deals are made, it’s unknown what differences may come up. — Anna Miller, WLJ editor
