Inventories of high quality hay throughout the Northwest are down due to untimely rains.
Although quality was lower across final cuttings, yields were strong and prices held steady.
Montana experienced rain throughout third cutting, with some areas reporting more rain
in one month than the average annual rainfall. The copious and untimely rains hindered third
cuttings and created large amounts of poor quality hay. Cold temperatures caused cattle operators to
start feeding hay earlier this year than normal. Operators are holding surplus hay in case of a
long winter and spring. Fall rains and early winter snows foster optimism for sufficient water supply in the 2020 growing season. Production in 2019 is up 3% year over year and up 10% from the five-year average. Current alfalfa prices range from $90-$120 per ton depending on quality, with grass hay
selling for $60-$80 per ton.
Rain in Idaho through third cutting dampened production of high quality hay, decreasing overall quality. Improved dairy margins have increased demand for higher quality hay, although premium and supreme quality hay inventories remain tight. Quality has not been ideal through the growing season, but yields are favorable. Alfalfa production was 5% lower in 2019 than the five-year average and down 7% year over year. Sales of higher quality hay to dairies are $180-$210 per ton. Good to premium prices range from $165-$180 per ton, and fair quality prices range from $130-$145 per ton.
In the Washington-Oregon Columbia Basin, a surplus of feeder hay shrank the price gap between high and low quality hay. Exporters are meeting with overseas customers to understand future demand better before they commit to further purchases. Higher quality alfalfa is trading for $200-$220 per ton, while lower quality feeder hay is trading at $180-$190 per ton. Organic
hay prices are reported at $240-$260 per ton. Although some first cutting timothy was rained
on, most is reported to have sold. Second cutting was hampered by unfavorable rains and is slow to move. Producers are timid about planting timothy in 2020, favoring alfalfa. The limited high quality 2019 timothy hay available is trading between $260-$300 per ton, and lower quality is trading between $170-$180. Prices are lower than a year ago due to an abundant supply and lower quality.
Overall hay production in Washington was up 6% year over year and up 17% in Oregon.
Demand in the Oregon-California Klamath Basin is favorable with tightening supplies. Retail hay is $220-250, big bale dairy $195-$205 per ton and export $180-$190 per ton. High quality hay is trading between $200-$220 per ton and feeder hay is reported between $150-$175 per ton.
National Situation
The USDA reported that hay acres are down 12% from 2018, representing the lowest hay acreage harvested in 111 years. Year-over-year hay inventories are down 29%. Almond acres in California are steadily increasing at roughly the same rate that alfalfa acres are decreasing as producers look
for more water-efficient crops. This is partly in response to the Sustainable Groundwater Management Act (SGMA), which calls for a reduction in groundwater usage. California tree nut growers are reportedly purchasing extra ground for the water rights to ensure they have adequate water.
Alfalfa production decreased 21% year over year and decreased 33% compared to the five-year
average. Almond acres surpassed alfalfa acres in the state in 2013.
International Situation
The U.S. House of Representatives approved the United States-Mexico-Canada Agreement (USMCA) and it’s expected to be ratified by the Senate in early 2020. The trade deal includes provisions for expanding U.S. access to the Canadian dairy market, improving agricultural labor situations and reducing the use of trade-distorting policies. The U.S. and China negotiated what is
termed “phase one” of a trade agreement on Dec. 13, 2019. This preliminary agreement removes the threat of new tariff impositions and reduces already imposed tariffs. As part of the agreement, China is expected to purchase $50 billion of U.S. agricultural products. A full agreement is expected to be
reached in 2020.
The U.S.-Japan Agreement was passed in October, removing tariffs and providing greater market access for U.S. dairy, beef and other agricultural products. Spain, Europe’s largest hay producer, has
increased hay exports to China year over year by 264% while decreasing exports to nearly all other trade partners including their top export market, the UAE. US Hay Exports West Coast alfalfa exports to China rose by 217% in October compared to a year ago, which is the third-highest monthly total on
record and stands in contrast to the 40% year-over-year decline in exports from January to June. The increase was spurred by the exemption of tariffs that took place in September. These gains in export volume are expected to slow as the Chinese New Year approaches.
Notwithstanding weak exports to China in the first half of 2019, year-over-year alfalfa exports increased by 6%. Exports to Japan, UAE and South Korea have increased by 18%, 40% and 13%, respectively. Hay exports from California increased 10% year over year and Washington/Oregon
exports increased 7%. While demand for export hay is optimistic, low inventory of high quality alfalfa in the Northwest may limit export volume.
Grass hay exports grew 3% year over year.
Japan increased imports 35,078 tons year over year and Taiwan increased imports 19,401 tons during the same period.
Shipments to South Korea are down 37,165 tons.
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