Hay stocks down

Hay storage at Anderson Hay & Grain Co. in Ellensburg, Wash., last September. Pacific Northwest on-farm hay stocks are 29% lower this May than a year ago.

ELLENSBURG, Wash. — With first-cutting alfalfa in Washington’s Columbia Basin delayed by rain, Pacific Northwest on-farm hay stocks are down 29%.

In addition, hay exports to China remain low because of a 33% tariff.

First-cutting began during a streak of warm weather the week of May 5 near Pasco, Wash., but rain 10 days later forced growers to postpone.

“Extended winter snow cover delayed alfalfa growth, setting first-cutting back about a week, which shortens the total growing season in the Columbia Basin and may reduce the number of cuttings producers are able to take this year,” said Jon Paul Driver, Northwest Farm Credit Services hay analyst in Spokane. “Waiting for rain to clear on first-cutting exacerbates that.”

On-farm hay stocks are depleted because the 2018 crop was average and dairies, beef cattle and other livestock needed more hay than normal in February and March due to cold weather, Driver said.

Oregon had its 13th-lowest May 1 hay stocks as a percentage of total production in 70 years, he said.

Mike Cobb, an Ephrata, Wash., grower, said there’s little money in hay and that it takes a lot of labor. Some producers probably switched to row crops to avoid the high costs of hay equipment, he said.

“Our margins are so small right now and have been the last few years that any little tiny hiccup is tough,” Cobb said.

May 1 on-farm stocks totaled 400,000 tons in Idaho, down 39% from a year ago, according to a report from USDA’s National Agricultural Statistics Service. May 1 stocks represented 8% of 2018 production.

Oregon stocks were 170,000 tons, down 47% from a year ago. Stocks are 6% of 2018 production.

Washington had 290,000 tons, up 26% from a year ago and at 10% of 2018 production.

The total of the three states was down 29% from a year earlier.

The U.S. total was 14.9 million tons, down 3% from a year ago, down 64.1 million tons since Dec. 1 and at 12% of last year’s production.

Low supply should push prices upward but a dampener will be low corn prices, said Jeff Calaway, president of Calaway Trading Inc., an Ellensburg, Wash., hay exporter.

Exporters want to buy Columbia Basin first-cutting at competitive prices but need good quality, he said.

Cobb said he doesn’t think there’s a strong correlation between corn and hay prices because cattle, horses and sheep need a certain amount of hay for their intestinal health regardless of price.

2018 crop Columbia Basin alfalfa large bale is selling at $175 to $180 per ton, according to USDA. Growers expect new crop to start at around $200.

There’s a lot of uncertainty about prices due to dairy demand — or the lack thereof — from decreasing herds, China tariffs and harvest weather, Cobb said.

China bought 1.2 million metric tons of U.S. hay in 2017, mostly for dairies. It was the No. 1 export market for U.S. alfalfa and was barely No. 2 to Japan for all U.S. hay.

As a result of tariffs, China has fallen behind Japan in alfalfa imports, Driver said.

China imposed a 25% tariff last July on top of the previous 8% tariff. That resulted in a 25% reduction in U.S. hay exports to China in 2018. The reduction ballooned to nearly 50% in the last half of last year, said Mark T. Anderson, president of Anderson Hay & Grain Co., Ellensburg, one of the largest U.S. hay exporters.

It appears hay is not in China’s May 13 round of tariff increases, Anderson said.

“While their volume is down, total impact has not really been seen due to lower hay stocks and continued demand both in the U.S. and other export markets,” Anderson said. “In general, we are seeing good demand from our core markets and many are hoping for good quality this season.”

The China decline was largely offset by increased buying by Saudi Arabia, Driver said.

California alfalfa exports to China were down 24%, or 268,000 metric tons, in 2018. Washington alfalfa exports to China were down 7%, or 26,000 metric tons, he said.

Total West Coast volume to China remained down 47% this year through March, Driver said. That’s 133,000 metric tons versus 250,000 the previous year.

California hay exports to China are down 40% and Washington exports are down 58%, he said, according to U.S. Census Bureau statistics.

“The on again-off again nature of negotiations with China creates uneven Chinese demand,” Driver said. “As outlook for an agreement improves, the Chinese slow down purchases figuring hay will become less expensive, and when the tone of negotiations sours they may buy more in the short run with expectation prices could increase.”

Central Washington field reporter

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