California goes shopping for hay
GEORGE, Wash. — Many Western hay growers are off to a good start this season and getting top prices as California’s lingering drought eats into that state’s hay crop.
California dairies usually buy hay from growers within the state and Nevada but are now reaching into the Pacific Northwest, Canada and other Western states as strong milk prices allow them to snap up premium hay at high prices. Exporters are also looking for hay as California’s crop has shrunk 10-25 percent and drought there continues to dry up irrigation water availability.
One of the Pacific Northwest farmers benefiting from the robust hay market is Justin Brown, 35. He raises 2,000 acres of alfalfa and 1,200 acres of Timothy on the rolling contours of Frenchman Hills south of George, Wash., with his father, Mike, and grandfather, Blaine.
“This is the best season we’ve seen and we hope it continues,” Justin Brown said.
Five California dairies have approached them in the past two months looking for hay.
“There’s a bidding war between California dairies and exporters up here throughout the (Columbia) Basin,” he said. “They (the five dairies) were fairly desperate but we said we wanted to keep our existing relationships.”
The Browns still benefited. Their first-cutting alfalfa went to hay exporters Callaway Trading in Ellensburg and Eckenberg Farms in Mattawa for $265 per ton, Brown said. That’s the highest price they’ve ever gotten for alfalfa, he said.
They harvested 3.5 to 4 tons per acre, up from a normal 3 tons per acre on the alfalfa, and they were hoping for 7 to 8 tons an acre in the $300-a-ton range on first-cutting Timothy.
Alfalfa is a perennial legume preferred by dairies and beef producers for its high protein. Timothy, a grass, is used domestically for horses and in Japan for horses and dairies.
For the Browns and many other hay growers, this season’s bounty is welcome. Rain devastated the region’s Timothy crop last season and for several years has damaged first-cutting alfalfa, virtually wiping it out in 2010.
“This is the best first-cutting in a long time. No rain. The weather and sky look good. Everyone is happy,” said Chep Gauntt, a Pasco grower.
He started his first-cutting of 1,400 acres of alfalfa near Wallula, 17 miles southeast of Pasco, on May 6 and finished May 27. Quality and prices were good but yields could have been better, he said. He finished getting bales of his first-cutting Timothy off his fields June 12, just before rain hit the region June 13. Most farmers had their hay safely put away, but some were caught with fresh cuttings on the ground.
About 70 miles north, in Warden, grower Shawn Clausen said his fields yielded 2 to 2.5 tons per acre on his first-cutting alfalfa when 2.5 to 3.5 tons is more the norm. Yields were down, he said, because a lot of growers cut early to get better nutrient levels for dairies. His tonnage was down 30 to 40 percent.
Supreme alfalfa has been selling for $255 to $275 per ton in the Columbia Basin, $250 in Oregon, $255 in Idaho and from $300 to $340 in California, according to USDA Market News Service.
It reached $360 in California’s San Joaquin Valley, said Nick Gombos, supply chain manager of ACX Global in Bakersfield, Calif., a leading hay exporter.
“I’ve never heard of anything ever that high in the hay business,” Gombos said.
But the record prices may not last. The Midwest is supposed to have a good corn crop and an abundant grain supply pushes all feed prices downward, he said.
Low grain and high hay prices work against U.S. hay exporters on the world market, Gombos said. Prices of high-quality hay on the export market likely will stay elevated but prices of middle and lower grades may soften, he said.
Dan Putnam, University of California-Davis Extension Service alfalfa and forage specialist, said California’s Imperial Valley is maintaining decent hay production but growers in other areas are down from 10 to 25 percent because of drought and water restrictions.
“It’s an ongoing story so it’s hard to predict” the outcome, he said.
Where they can, growers are shifting water from hay and row crops to orchards and grapes because of the greater investment in them, he said.
Buying from Montana, Canada
California dairies are buying top quality hay from as far away as Montana and Canada, Putnam said.
Shrinking acreage and growing exports also contribute to the tight hay supply, Putnam said. U.S. farmers this year are growing about 20 million acres of hay, compared with 25 million to 28 million acres a few years ago, he said. California once had more than 1 million acres and now has 900,000 acres.
Exports have also grown. Only 5 percent of Western alfalfa was exported in 2007. Now 11 to 12 percent is sent overseas, he said. All of that is coupled with the dairies’ greater buying power from high milk prices, he said.
“I was in Idaho (June 4) and California brokers were there,” Gombos said. “They’ve been buying in Idaho, Washington, Oregon, Utah and Arizona. You don’t see that in a normal year.”
They won’t get much hay in Idaho because dry weather has depressed production and the state’s large dairy industry will get most of the local hay, said Dennis Strom, president of the Idaho Hay and Forage Association.
Eastern Oregon’s higher elevation hay comes later than Washington’s and so far it’s too early to say how much will go to California, said Scott Pierson, owner of Pierson Hay in Silver Lake and president of the Oregon Hay Growers Association.
Prices impact exports
California dairies and hay brokers continue to drive the market, Gombos said.
“I wouldn’t say exporters are on the sidelines, but they’ve been in the back seat because our markets have a difficult time transferring to higher prices,” he said. “Particularly, there’s resistance in Asia.”
Exporters only follow prices so far, said Mark Anderson, president of Anderson Hay & Grain Co., a major West Coast exporter based in Ellensburg, Wash.
“We have to be careful how much top price we put together,” he said.
China, Japan, the United Arab Emirates and every overseas market takes some premium hay at top prices, but there’s a lot of bulk buyers who price shop through the summer, Anderson said.
Exporters are looking for “real perfect hay,” and scattered showers impacted the quality of some of Washington’s first-cutting alfalfa, he said.
Japan and South Korea buyers are weary of high prices for low-quality Washington Timothy produced the last two years and have turned to Australian oat hay, Anderson said.
Those markets will be helped if Washington produces higher quality Timothy this year, he said.