Posted: Friday, February 01, 2013 9:52 AM
By CAROL RYAN DUMAS
Two years of drought have taken their toll on U.S. hay supplies, according to a USDA report.
Dec. 1 hay stocks dropped double digits in 2011 and 2012, first from the drought in the Southern Plains and last year from the more widespread drought in the Midwest.
The latest Dec. 1 hay stocks came in at 76.5 million tons, the lowest since 1957, according to the USDA's National Agricultural Statistics Service report released in January.
Lower hay stocks are a result of reduced hay production and increased hay feeding due to the two-year drought, leaving the U.S. with severely depleted forage supplies, Derrell Peel, Oklahoma State University extension livestock marketing specialist, said.
Hay production in 2012 was 120 million tons, down 18 percent from the 2006-2010 average and the lowest since 1974. Production in 2011, at 131 million tons was down 10 percent from the same five-year average, he said.
Over the last two years, hay stocks have dropped 25 percent from the 2010-11 marketing year, with December 2012 hay stocks down 28 percent from the 10-year average of the 2001 through 2010 marketing years, reports the Livestock Marketing Information Center.
"The result of a very low hay stock number is a continued escalation in hay prices as we move through winter. How rapidly prices go up will depend on the weather," LMIC reports.
Hay supplies are going to depend on how much livestock producers have to feed out of existing stocks before the first cutting of hay, said Katelyn McCullock. LMIC dairy and forage economist.
The national average price in January was $191 a ton for all hay, down $1 from December but up $19 from January 2012. The average price for alfalfa hay was $217 a ton for alfalfa hay, the same as December but $24 higher than January 2012.
Prices on all hay had already jumped $64 a ton in the 2011-12 marketing year. Alfalfa jumped $73 a ton in 2011-12. Both are looking to be up again and so far, they're up about $14 a ton in this marketing year, she said.
Things seem to be a little better in the West, with hay prices not rising as high in 2011-12 and actually coming down over the course of this year. She believes that's tied to the lack of profitability in the dairy industry, she said.
But there's probably more upside than downside for the remainder of the year, and prices could go higher, she said.
LMIC expects most of the increases in hay prices to come from hay other than alfalfa, as dairy producers unlikely to be able to handle significantly higher alfalfa costs.
The price for dairy quality hay in south-central Idaho is running about $240 a ton. As stocks get tighter, it's reasonable to expect that price to increase, said Rick Naerebout, manager of Idaho Milk Producers.
All feed costs are high, and its' causing a lot of stress and anxiety, especially as the pay price on milk has fallen below cost of production, he said.
He hasn't yet heard that hay has been hard to source locally, but there's still another four months before first cutting hay starts coming in. A lot can happen between then and now, he said.
In the beef cattle sector, anyone who's having to buy hay is feeling the squeeze, said Lee Bradshaw, president of Idaho Cattle Association and a feedlot nutritionist in Caldwell.
Feeder hay is going for $180 a ton or higher, and all feedstock prices are high. Feeders and cattle producers are getting good prices for their cattle, but they're having to put it back into their cattle as feed, he said.
He's getting calls from industry folks asking if he knows anyone selling hay. That tells him supplies are getting a little tighter and harder to find, he said.
How tight supplies get in the coming months depends on the weather. More snow will mean less ability to graze residual forages and the colder it gets, the more energy cattle need from the feed. It'll also depend on how long it is before first cutting hay comes in.
"Most feedlots I work with have their hay supply tied up, and most ranchers do, too. But if it's a long winter, it'll get harder to find," he said.
Dec. 1 Hay Stocks on U.S. Farms
2012 -- 76.5
2011 -- 90.7
2010 -- 102.1
2008 -- 103.7
2007 -- 104.0
2006 -- 96.4
2005 -- 105.1
2004 -- 114.3
2003 -- 110.7
2002 -- 103.8
Dec. 1 stocks announced the following January, with some revised in the following year's report.