It’s been a slow recovery for U.S. hay exporters from oversupply the last couple of years due to the West Coast port slowdown of 2014 and 2015.
ELLENSBURG, Wash. — Hay exporters are beginning to rebound from more than two years of oversupply and low prices, but they say business is still lacking.
“Overall quality is up but demand is flat to down and shipments are down because of a rapid price increase. Export volume is down versus this time last year,” said Mike Hajny, owner of Hajny Trading, an Ellensburg hay exporter.
“The timothy market has improved. Alfalfa continues to be underpriced in export markets. There continues to be more processing capacity for export than demand. We need more growth in export markets,” said Mark T. Anderson, president of Anderson Hay & Grain Co., a large West Coast exporter in Ellensburg, Wash.
While prices have improved they are still low for growers and exporters compared to their costs, Anderson said.
Exporters lost money on a lot of hay last winter to clear out an inventory build-up caused by a union work slowdown at West Coast seaports in 2014 and 2015. A long, cold winter and cool spring increased domestic feeder hay demand and helped reduce stockpiles.
In the Columbia Basin, the price of premium export alfalfa increased from $120 to $180 per ton in less than six months.
The sharp price increase met some overseas buyer resistance and while Japan, South Korea and China began buying more U.S. hay they will also be looking for cheaper alternatives, Hajny said.
“Pricing in China continues to be low compared to U.S. market conditions,” Anderson said.
The average farmgate price of big bale premium timothy was $245 per ton in the Columbia Basin on Aug. 18 and $155 to $175 for alfalfa, according to the USDA.
Shawn Clausen, a Warden, Wash., grower, said hay prices are now slumping because corn and wheat prices fell in just the last two to three weeks. At lower prices, grain will be attractive to overseas livestock owners who normally buy hay, he said.
Exporters are leery of buying hay at $175 per ton and being unable to sell it profitably overseas, he said.
Third-cutting alfalfa in the Columbia Basin was compromised in quality by about two weeks of smoke from British Columbia wildfires, Clausen said.
“It created a false cloud cover. The sun didn’t come through and that created high humidity and a lot more bleached out hay that took a couple more days drying time,” he said.
Smoke had a “big impact” on third cutting quality, Anderson said.
Analysis and color of alfalfa is generally better this year, but timothy quality is “outstanding, the nicest we’ve seen in years” with second cutting following far enough after the smoke to not be damaged, Hajny said.
“Essentially, Ellensburg and Idaho went up with no rain on timothy and it caught limited showers in the Basin,” Hajny said.
First-cutting yields were light because the weather was too cool in May, and Columbia Basin tonnage undoubtedly will be down 10 percent this year, Clausen said.
He normally gets yields of 9 tons per acre but will be closer to 8 this season, Clausen said. He plans to begin swathing fourth cutting on Sept. 11 and finish baling by Oct. 1.
“Overall the hay industry is better this year than last without a doubt. I have a chance to break even and pay my bills. Last year was a loss,” Clausen said. “It’s a slow comeback from the port deal. I won’t be planting more alfalfa next year. I don’t do timothy, but I may next year.”
U.S. hay exports, mostly along the West Coast, were developed in the 1970s for the dairy and beef markets in Japan, South Korea and Taiwan. In the last 10 years, China and United Arab Emirates became big markets. Exports peaked at 4.5 million tons in 2013, were just under 4 million in 2014 and were about 4.2 million in 2015 at a value of $1.3 billion, according to the University of California-Davis.
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