Drought, exports drive hay markets
Drought and strong exports are expected to keep hay prices strong in the West, particularly for alfalfa, according to Katelyn McCullock, dairy economist with the Livestock Marketing Information Center.
With the exception of Texas, most of the country has recovered from a moving drought that hit largely in the Southern Plains to affect the 2011/12 marketing year and centered in the Midwest to affect the 2012/13 marketing year, she said.
A return to normal weather in most of those areas in 2013 is expected to hold in 2014, and LMIC is forecasting decreased hay prices for an annual national average of $135 a ton for all hay, $150 a ton for alfalfa hay and $100 a ton for other hay in 2014.
But a drought in the West, largely centered in California, is expected to keep prices higher in the region. LMIC is not forecasting how high alfalfa prices might go.
Premium alfalfa hay is selling at $195 a ton in Idaho and $300 a ton in northern and central California, according to USDA Market News report.
Prices for dairy quality hay could reach $230 to $250 a ton in Idaho by late summer and $325 to $350 a ton in California’s Central Valley, Wilson Gray, University of Idaho extension livestock economist, said on Tuesday.
If California doesn’t get much of a crop, the state’s livestock producers will import hay from wherever they can get it at a higher cost than those local markets. But they’ll have drought assistance to help pay for it, he said.
Several factors will keep prices in the West above the national average, McCulloack said.
California produces 7 percent of the country’s hay, and much of that production is in jeopardy with the drought and irrigation water shortages. A huge drop in production could affect hay prices as far east as Kansas, she said.
In addition, 41 percent of national milk production is located in the West, and usage of hay for dairy feed will be a factor in prices, she said.
Western states typically grow more alfalfa than other hay, and alfalfa prices will be impacted more than other hay prices, she said.
Hay exports from the West are also unlikely to slow. U.S. hay exports have had “tremendous growth” in the last several years and a high proportion of those exports come from western states, she said.
Hay exports continued to grow in the last three marketing years, despite record-high prices, and alfalfa demand will continue to be strong. China has ramped up its alfalfa imports from the U.S. since 2011, and its imports of U.S. alfalfa in 2013 were thirty times the amount of those imports in 2008, she said.
Opportunities to export expensive, high quality alfalfa are really good for the Pacific Northwest states, she said.
Nationwide, all hay acreage is up slightly, with alfalfa acres up 2.5 percent compared with last year. Hay stocks on Dec. 1 were up 17 percent from a year earlier, although they are still 14 percent below the 10-year average. But hay prices in the West saw increases the first of the year, counter to the rest of the country, she said.