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Hay Supplies are Short

September 26, 2012

Dr. Tom Troxel

Dr. Michael Looper

 

As cow-calf producers prepare for the coming winter months, feed availability will likely remain a concern. Hay prices have increased sharply in the last two years following significant drought conditions in the Southern Plains (2011) and in the Midwest and Great Plains (2012). By far the most dramatic impact has been on the supply of alfalfa, a high quality feed ingredient with superior levels of protein and energy.

 

In its August crop production report, USDA provided an early indication of the 2012 expected output for alfalfa hay and other hay. USDA currently forecasts US alfalfa production at 54.9 million ton, 16% lower than a year ago and 20% lower than the five year average. Production of other hay products (excluding alfalfa) is currently projected at 65.4 million ton, slightly below the 65.8 million ton produced last year but some 12% lower than the five year average.

 

Short supplies of alfalfa hay have dramatically impacted prices for this product. The average national price for alfalfa hay in August was quoted at $201/ton but there is significant range in prices depending on quality of product delivered. Premium quality product in California, for instance, a state with the largest number of dairy cows, is trading around $260/ton. The national average price for other hay was quoted in August at $140/ton, slightly below the all time high of $146 established in May.

 

The lack of feed availability and the sharp increase in the price of other feed alternatives will tend to pressure cow-calf producers and dairy producers going into the winter months. While

US beef cow slaughter has been lower than some expected in July and August, we could see more cows come to market going into the fall. Seasonally this is to be expected and the fall cow run continues until late November. The short feed availability will likely further exacerbate the situation.

 

So far we have seen a notable increase in the number of dairy cows coming to market. With both corn and alfalfa prices at record levels, producers have had to cull swiftly. Also, keep in mind that while the US beef cow inventory is down some 8% from 2007, the inventory of dairy cows is almost 1% higher than it was five years ago. The ratio of hay fed per dairy cow is dramatically smaller than it is for beef cows. Between July 1 and mid August, US dairy cow slaughter (based on weekly numbers) is estimated at 395,290 head, 12% higher than the previous year.

 

Beef cow slaughter during the same period was 445,069 head, 15% smaller than the previous year. Overall US cow slaughter was 840,359 head, 4% smaller than last year. The liquidation in the dairy industry is likely not over considering the significant mismatch between current milk prices, cattle inventories and feed availability. Beef cow producers also will face some difficult decisions come fall as probably even higher hay prices will be required to ration available supply (Source: CME Group).

 

2 Comments leave one →
  1. Betty Pennington permalink
    September 26, 2012 5:24 pm

    When is Gov Beebe’s $2 Million coming out to the farmers to help buy hay?

    • ansc01 permalink
      September 28, 2012 10:28 am

      The first round of checks are to be mailed out today. That is all the information we have at this time.

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