Hay exporters worried about China

A trucker sweeps his flat-bed trailer as second-cutting Timothy from Ephrata, Wash., is unloaded at Anderson Hay & Grain Co. in Ellensburg, Sept. 20. Exporters have enjoyed good quality from good weather but are worried about sales damage from China's higher tariffs.

ELLENSBURG, Wash. — Hay harvest is wrapping up in Washington’s Columbia Basin and in Oregon and while weather and quality have been generally good, the big deal in the export world is loss of sales to China because of higher tariffs.

China had an 8 percent tariff on U.S. hay but added another 25 percent for a total of 33 percent in retaliation to President Donald Trump’s steel and aluminum tariffs.

“Volume has dropped significantly since July because of the tariff, down more than half,” said Jeff Calaway, president of Calaway Trading Inc., a major West Coast exporter in Ellensburg.

China buys about 1.2 million metric tons of U.S. hay per year, mainly for dairies. It’s the No. 1 export market for U.S. alfalfa and is barely No. 2 to Japan for all U.S. hay.

But another major West Coast exporter in Ellensburg, Mark Anderson, president of Anderson Hay & Grain Co., said there has not been a large impact in the China market yet because that nation uses a lot of its own hay in summer months. Any impact will be more evident when September through December numbers are compiled, he said.

“Our hope is that some kind of agreement comes together with China in the coming months,” Anderson said.

Calaway said traders he deals with in China are saying China’s summer production is almost gone.

“It’s lower quality and I think there’s a lot of pressure on them. They need hay and have dropped some of the tariffs they imposed (on other products),” he said.

New U.S. trade agreements with Mexico, Canada and South Korea and progress with Europe and Japan also pressures China, Calaway said.

“China will have to come around. It is more dependent on us than we are on them,” he said.

Saudi Arabia continues to be a growth market for U.S. hay, Calaway and Anderson said.

Second-cutting Timothy is done in Eastern Washington, limited third-cutting is finishing in the southern Columbia Basin and alfalfa will soon be done, Anderson said.

Oregon is wrapping up alfalfa in Christmas Valley and Klamath, the latter of which is sold mostly domestically, he said.

The Pacific Southwest will continue with a couple more fall cuttings mostly for domestic market, he said.

“Quality has been nice with a mix of grades produced in all areas,” Anderson said.

Inventory of feeder hay maybe tightening in the PNW as quality has been better from lack of rains, he said.

But quality and color has also been damaged from wildfire smoke preventing hay from drying in a timely fashion, Calaway said. The Pacific Southwest gained export market share over the PNW in recent years due to lower shipping costs. While PSW shipping costs remain lower its prices have increased due to Saudi Arabia demand and drought in New Mexico, Anderson said. That’s allowed the PNW to regain some market share, he said.

Exporters have generally recovered from market losses due to the 2014-2015 work slowdown at West Coast seaports, Anderson said.

Supply and demand are matching up well this season and generally hay prices have been good in the Pacific Northwest for growers and domestic and export markets, he said.

USDA Market News, Washington and Oregon, out of Moses Lake for Sept. 28 said demand from exporters was light with more interest from dairies and Canadian buyers. High test alfalfa was in short supply. Alfalfa mid-square Supreme averaging $200 per ton and Good $165 per ton. Alfalfa small square Premium $200 and Timothy small square Premium $260.

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