Moderate winter conditions eased hay demand. Hay inventories are higher than expected yet high quality hay is scarce. Export demand remains favorable. However, shipping container supply will continue to be a challenge through the COVID-19 disruption.
In Montana, warmer spring conditions eased demand for livestock feed. Current alfalfa prices per ton range from $70 for fair quality to$125 for premium quality hay; grass hay is selling for $70-$90.
Idaho cattle producers are begging to sell excess feeder hay inventory as winter weather comes to an early close. 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.
Water delivery began the last week in March. Growing conditions in eastern Idaho are slightly delayed while in southern and western Idaho hay production is on time.
In the Washington-Oregon Columbia Basin, price ratios between hay and alternative crop rotation favor increasing alfalfa acreage in 2020. Anecdotal reports confirm increased alfalfa planting intentions. Higher quality alfalfa is trading for $200-$220 per ton, while lower quality feeder hay is trading at $180-$190.
Timothy prices decreased significantly. The USDA reports few high quality hay sales, which is still available and trading between $200-$325 per ton, while lower quality is trading between $100-$125. Prices are lower than a year ago due to an abundant supply and lower quality.
Demand in the Oregon-California Klamath Basin is favorable with tightening supplies. Retail small bale alfalfa prices are stable between $220 and $250 per ton. Premium alfalfa in large square bales are trading around $190 per ton and good quality hay is trading around $160, unchanged from the beginning of the year.
International Situation
The coronavirus disrupted both the supply and demand sides of the economy. Supply side disruptions started in China as migrant workers were ordered to stay home. Shipping container availability became inadequate as many shipments were waylaid in China. Shipping container availability remains a concern, but some shipment of empty containers around the world is starting to alleviate shortages. Although China has sent workers back to work, most factories are under full capacity. At the end of March, orders for Chinese products to the U.S. slowed. This will delay container movement back to the U.S., potentially creating shortages in several weeks. The seesaw supply of containers will continue for the foreseeable future.
Trade Wins
The phase one deal between the U.S. and China sets the stage for timothy and alfalfa cube export protocols. Per the deal, "Within one month of the date of entry into force of this Agreement (Feb. 15), the General Administration of Customs of the People’s Republic of China (GACC) shall meet with
USDA/APHIS and conduct an on-site visit of U.S. production of U.S. alfalfa hay pellets and cubes, U.S. almond meal pellets and cubes, and U.S. timothy hay. Within three months of the date of entry into force of this Agreement, USDA/APHIS and the GACC shall sign and implement a phytosanitary protocol to allow importation into China of these products."
There is still uncertainty around how strong demand will be, but the ability to ship to China is favorable for Northwest timothy growers. Chinese buyers tend to focus on "clean and green" alfalfa grades. If this turns out to be the trend with timothy, this news should provide some optimism to a market oversupplied in mid-grade timothy. However, COVID-19 will likely delay implementation of the phase one trade deal.
Australian Oaten Hay
Australia was on track to export 1.1 million tons of oaten hay. These exports are split between Japan, South Korea, Taiwan, China and a few other countries. However, this forecast is in question as demand in northern Australia outstrips available supplies in the southern part of the country.
For the 2020 season, Australia may come up short in meeting their export forecasts. There is still uncertainty about how strong demand will be, but the ability to ship to China is favorable for Northwest timothy growers. A possible Australia supply shortage favors exports of timothy to all Asian countries, especially China. This is an opportunity to make inroads to China.
Canadian Exports
Total Canadian timothy exports rallied 20% year over year. The additional 41,000 tons is driven by gains in all major trading partners. Japan led the increase with an additional 22,000 tons. A 245% increase in timothy exports to China seems optimistic but represents only an additional 6,000 tons. As U.S. timothy growers turn their attention to China, their hopes are muted by modest existing timothy exports from Canada. However, in 2019 Australia exported 247,293 tons of oaten hay to China. Oaten hay and timothy are partial substitutes in some rations.
US Hay Exports
West Coast alfalfa exports to China decreased 1% year over year. This 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 trade disruptions continue. Notwithstanding weak exports to China in the first half of 2019, total year-over-year alfalfa exports increased 5%. Exports to Japan, UAE and South Korea have increased by 14%, 26% and 13%, respectively, while exports to Saudi Arabia decreased 13%.
Grass hay exports grew 2% year over year. During the same period, Japan increased imports 49,980 tons and Taiwan increased imports 18,300 tons. Shipments to South Korea are down 46,793 tons.
Australia
Australian exports decreased 8% year over year. Western Australian exporters were able to cover most export shortfalls in South Australia, Victoria and New South Wales. Rains have begun to alleviate some drought conditions in eastern Australia. This negated the need for imported forage.
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