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CME: Alfalfa Hay Prices Higher Every Month in 2018

12 December 2018

US - Steiner Consulting Group, DLR Division, Inc. reports that hay production rebounded significantly this year on more acres and normal yields, but prices are still significantly higher than last year.

The 2018-2019 marketing year began with the exceptionally tight stocks.

According to USDA, nationally the US had less than 16 million tons of hay (all hay), which is the lowest value in our dataset since 2012/2013.

USDA will update US hay inventory in January with the 1 December hay stocks, but until then it’s a guessing game as to how much forage has been consumed so far this year.

Last year, drought and lower forage availability forced higher disappearance throughout the year.

This year, all hay production rebounded 2 percent, but disappearance is expected to be less, as prices have been significantly higher.

Alfalfa hay prices have been $25-$32 per ton higher every month of this year, even though production in alfalfa was up 8 percent on three quarters of a million more acres and 3 percent higher yields.

However, based on the ratio of alfalfa to other hay production last year, LMIC estimates that inventories of alfalfa alone were near the record low and under 7 million tons, which is only the second time since 1959.

Other hay prices have been mostly higher as well (see the following chart). Other hay supplies started the year in better shape than alfalfa.

However, yields of other hay continue to struggle on the national level. Small gains in acreage (up half a million from last year) did not make up for losses in yield this year and its expected production was down 2.2 percent.

Yield and acreage will be finalized in the annual crop production report released in January.

For hay growers, even though prices have been higher, export markets have softened significantly this year.

Some hay products have fallen under the tariffs levied by China, which is a major buyer of alfalfa hay. Other hay exports were not immune either.

So far this year, total tonnage of other hay shipped overseas is down 14 percent. Alfalfa exports are down 6.5 percent.

Chinese imports of alfalfa are down 21 percent through 30 September, but aggressive Saudi Arabian purchases (up 38 percent in the first three quarters) have buffered those impacts.

Through the first three quarters of the year, the US has shipped nearly 3 percent of estimated alfalfa production and just over 1 percent of other hay production.

In recent years, domestic livestock producers have had to compete with fast growing export markets, that caused hay prices to surge in 2014.

This year, smaller export purchases have spared domestic livestock producers from even higher forage costs, even if that’s difficult to see from the graphics displayed here.

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