January 12, 2015
Should we expect a DROP in the cost of Hay?
Yes, definitely. We reported in November that there was a 12% increase in production of Alfalfa, yet prices were robust. January 7th we learned November exports to China, Japan and the United Arab Emirates were lower for Alfalfa and Hay. Then we have a serious drop in the cost of oil which is $46.88 per barrel today, down from a high over $110. These three factors add up to a significant drop in cost for the production and distribution of the Hay we buy whether it’s shipped from California or grown in Arizona. (Supporting Articles below)
U. S. Dept of Ag Report for January 9 (USDA does not report on Arizona Hay):
“Compared to last week: All classes traded mostly steady on light demand on very light tests. Trade was moderate to inactive. With the recent rains and current available supplies, the demand for lower test hay continues to trend down. Ports are having issues getting product shipped out due to a labor dispute, but a federal mediator has been added this week to help resolve the ongoing issue. Exporters have all but exited the market with the port issue and the dollar’s strength overseas. A lot of hay is on the ground in region 6 with rain in the forecast this coming Sunday. Milk prices continue to drop which means dairies will have less money to spend on test hay. Prices reported FOB at the stack or barn unless otherwise noted.”
Alfalfa is $250/ton or $12.50/bale. Expect California Alfalfa Retail to be roughly $13.75 or more. Arizona grown should be less. Bermuda Premium is $220.00/ton or $11.00 per bale +delivery should bring retail in Arizona to roughly $13.50/bale. We should be paying less for Arizona Bermuda.
*Unfortunately, uneducated buyers, pay “Premium” quality prices or more for lesser quality hay.*
November U.S. Alfalfa, Hay Exports Lower
U.S. alfalfa hay exports totaled 124,939 metric tons in November, down about 21,500 tons from October and the lowest monthly total of the year, according to USDA’s Foreign Ag Service. Alfalfa exports for the month were valued at $40.9 million, down from $48.7 million in October. China was the top foreign alfalfa hay market for the month (50,598 metric tons), followed by Japan and the United Arab Emirates (UAE).
Meanwhile, November 2014 U.S. exports of other hay, at 126,563 metric tons, were down 27,400 metric tons. Exports of other hay for the month were valued at $43.0 million, down from $53.5 million the month before. Japan was the leading market for the month (65,243 metric tons), followed by South Korea and UAE.
Hay supplies rebound in 2014/15
USDA’s Nov. 13 Feed Outlook report recapped the domestic hay situation.U.S. production of alfalfa and alfalfa mixtures is up 12% in 2014, with notable year-over-year production gains forecast. As of Oct. 1, production gains were expected in Arizona, California, Colorado, Idaho, Michigan, Minnesota, Nebraska, New Mexico, South Dakota and Wisconsin.
Yield gains and expanded area harvested contribute to the 6.94-million-ton production increase. Yields averaged 3.55 tons per acres in 2014, up from 3.24 tons in 2013. Area harvested is forecast to rise from 17.76 million acres to 18.19 million. Increases in area harvested are not attributable to a substantial expansion in any single state. Rather, most states posted modest positive gains; only 8 of the 29 reporting states indicate a decline in area harvested.
Despite production gains, hay prices have generally remained robust over the past year. For example, in October 2013, the all hay, alfalfa and other hay prices were estimated at $174, $193, and $139/ton, respectively. In October 2014, these prices are forecast at $173, $194, and $125/ton – between 100% and 90% of the 2013 price. Strength in the dairy sector is providing price support, in addition to premiums paid for high-quality hay that is being transported to drought-affected regions of the country from areas of relative abundance.