At Progressive Forage’s deadline, officials in the Northern Plains were preparing for an early September hay lottery, with livestock producers from Montana, North Dakota and South Dakota eligible to receive hay. An emergency hay transportation fund was also established in North Dakota to assist with trucking costs. In Montana, hay donations poured in, but truckers were in short supply.

Natzke dave
Editor / Progressive Dairy

Heavy smoke from fires was affecting hay quality and slowing movement of hay due to highway closures and fire mitigation in the Pacific Northwest, according to Christy Mastin, international sales manager with Eckenberg Farms Inc., Mattawa, Washington.

The Texas Department of Agriculture was coordinating hay donations there, while Florida and Georgia prepared for Hurricane Irma.

Alfalfa hay prices

The latest available USDA monthly ag prices report was released Aug. 30, summarizing July 2017 prices.

Alfalfa

The July 2017 U.S. average price paid to alfalfa hay producers at the farm level was $152 per ton, down $2 from June’s revised estimate but $14 more than a year earlier.

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On a regional basis (Figure 1), July prices were higher than month-earlier levels in the Northwest, largely based on increases in Idaho (+$25 per ton) and Oregon (+$10 per ton). In the East, a large increase in Pennsylvania (+$33 per ton) was offset by declines in Ohio (-$18 per ton) and New York (-$16 per ton).

Alfalfa market trends

Prices settled in the drought-impacted Northern Plains (Montana, North Dakota and South Dakota) and moved lower through much of the Midwest and Southwest.

Compared to a year earlier, prices were $20 to $30 higher in Arizona, California, Colorado, Kansas, Nevada, North Dakota, Pennsylvania, South Dakota and Washington but $10 to $40 per ton lower in Illinois, Kentucky, Ohio and Oklahoma.

Other hay

The July 2017 U.S. average price for other hay was estimated at $126 per ton, up $1 per ton from June’s revised average. Regionally, prices were lower in the Midwest but higher elsewhere (Figure 2).

Other hay

Among individual states, July prices for other hay were up $20 per ton in Washington and $10 per ton in Arizona, Idaho, Nevada, New York and Ohio; Oklahoma and Kentucky reported prices down $15 and $10 per ton, respectively.

Compared to a year earlier, prices were $65 per ton higher in Washington, and $15 to $25 higher in Arizona, California, Colorado, Idaho, Minnesota, Montana, Nevada, New Mexico, North Dakota, Texas and Wisconsin. Prices were $10 to $15 per ton lower in Illinois, Kentucky and Oregon.

Figures and charts

The prices and information in Figure 1 (alfalfa hay market trends) and Figure 2 (“other hay” market trends) are provided by NASS and reflect general price trends and movements. Hay quality, however, was not provided in the NASS reports. For purposes of this report, states that provided data to NASS were divided into the following regions:

  • Southwest – Arizona, California, Nevada, New Mexico, Oklahoma, Texas

  • East – Kentucky, New York, Ohio, Pennsylvania

  • Northwest – Colorado, Idaho, Montana, Oregon, Utah, Washington, Wyoming

  • Midwest – Illinois, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, South Dakota, Wisconsin

Organic hay

The USDA’s organic hay report, released Aug. 30, reported grower FOB farm gate organic alfalfa prices as follows: Supreme – $325 per ton for large square bales, and Premium – $250 to $260 per ton for large and small square bales. Delivered large square bales of Fair/Good organic hay averaged $170 per ton.

National organic grain and feedstuffs report.

Alfalfa hay exports weaken

Monthly exports of alfalfa hay dipped to a calendar-year low in July, but year-to-date sales remained at a record-high pace. U.S. alfalfa hay exports were estimated at 184,218 metric tons (MT) for the month, the lowest total since February 2016.

China was the leading foreign market for alfalfa hay during the month at 84,384 MT. It was the lowest monthly total since January, however.

July 2017 sales of other hay rebounded slightly from May-June. Monthly sales totaled 127,816 MT, with sales to South Korea complementing market leader Japan.

July exports of alfalfa cubes and meal were mixed.

Auction and market summaries

Here’s a peek at late August/early September auction market summaries:

  • East: Alabama hay prices were steady with light supply and good demand. In Pennsylvania’s Lancaster area, all varieties of hay and straw sold mostly steady on light test. Demand was good.

  • Southwest: All classes of California hay traded steady with moderate demand. Sorghum for silage was cultivated and irrigated; corn for silage was harvested. In Oklahoma, alfalfa trade was moderate to good demand, with active movement in western and central Oklahoma. Prices are fully steady. Movement was also good on wheat hay in western counties.

    Grass hay demand and movement was very light and supplies mostly burdensome. Third and fourth cutting of alfalfa is still underway. In Texas, most hay classes remained steady with top-quality alfalfa steady to firm as it becomes more difficult to find; more rained-on hay is coming to market. South and east Texas coastal bermuda producers weathered through Hurricane Harvey.

    Most are optimistic about getting another cutting and should have plenty of hay going into the winter months. New Mexico alfalfa hay prices were unchanged on light demand. Rain showers subsided, and a fifth cutting is in full swing across the southern regions.

  • Northwest: In Idaho, prices for domestic and export alfalfa were steady in light test. Trade was slow with moderate to good demand. Prices for Premium and Good alfalfa were steady in the Washington-Oregon Columbia Basin. Utah hay prices were mostly firm, with trading slow on all qualities.

    Lower-quality hay demand is light with good supplies. In Montana, prices were generally steady as drought conditions continued to worsen. Demand and supplies were mostly light to moderate. Compared to the previous week, prices were mostly steady with good demand across Wyoming. Colorado prices were steady with activity and demand good in all classes.

  • Midwest: In Iowa, hay prices trended mostly steady to instances of $5 per ton higher for higher-quality alfalfa and grass hay. In Missouri, some producers were baling fall grass hay. Hay supplies are currently adequate; movement remains fairly slow. Demand is light and prices are steady.

    In Nebraska, alfalfa and grass hay sold steady. Ground and delivered forages were mostly $5 to $10 higher; ground and delivered cornstalks sold steady to $15 higher. In South Dakota, all classes of hay sold steady. Drought conditions saw slight improvement in the eastern part of the state, but central and western regions remained gripped in severe to extreme drought.

    The low cost of corn is tempering demand for dry hay as cattlemen look for ways to cheapen their rations. The opening of Conservation Reserve Program acres for haying and grazing has kept the hay market from getting as high as some producers had thought.

    In Wisconsin, prices were steady with lackluster demand. Large supplies of lower-quality hay are available, but supplies of high-quality hay are scarce and bringing premium prices. In southwest Minnesota, prices were steady. Only lower-quality hay was available at auction.

Drought area increases

The USDA’s World Agricultural Outlook Board estimated 15 percent of U.S. hay-producing acreage was located in areas experiencing drought as of Aug. 29. Drought conditions expanded in Iowa and Montana while improving somewhat in eastern North Dakota and South Dakota. Northern Idaho and Minnesota reported drought areas with pockets in western Nebraska, central Kansas, southeastern Missouri and the southern tip of California.

Check out the hay areas under drought conditions.

US drought monitor

Fuel prices higher

The Texas Gulf Coast is home to over 25 percent of U.S. refining capacity, and the Gulf of Mexico accounts for nearly 20 percent of total U.S. crude oil production. Hurricane Harvey impacted both, and fuel prices moved sharply higher to start September, according to the U.S. Energy Information Administration.

As of Sept. 4, U.S. on-highway diesel fuel prices averaged about $2.76 per gallon, up 15 cents per gallon from a week earlier and up about 35 cents per gallon compared to a year ago. California diesel prices averaged nearly 38 cents per gallon higher than the national average.

The Energy Information Administration estimated U.S. retail prices for regular gasoline averaged about $2.68 per gallon as of Sept. 4, up 28 cents from the week before and about 46 cents per gallon more than a year ago.

Petroleum & other liquids

Dairy outlook: Dog days of summer

The dog days of summer took a small bite out of dairy income, based on the USDA’s monthly Margin Protection Program for Dairy (MPP-Dairy) calculations. While July’s average milk price remained on a leash, corn and soybean meal costs increased prior to August crop production estimates.

Milk prices exhibited volatility in August, but feed prices declined. The lower feed costs should more than offset some milk price weakness. However, milk futures prices dropped substantially at the end of the month.

The USDA’s August World Ag Supply and Demand Estimates report made deeper cuts to 2017-2018 U.S. milk production forecasts, but that had virtually no impact on milk price projections. As in recent months, the reduced milk production forecasts were tied to slower growth in milk per cow, more than offsetting increases in dairy cow numbers.

Beef cattle outlook

The USDA raised the forecast for 2017 beef production, citing relatively large cattle placements in the second quarter which will likely impact fourth-quarter cattle slaughter. The beef production forecast was also raised for 2018, with large feedlot placement numbers to continue into late 2017 and early 2018. August feedlot inventories, placements and marketings were all higher than a year earlier.

Pressured by the larger expected beef supplies, projected fed cattle prices were reduced in 2017 and 2018. The USDA said beef prices have already peaked for the year, forecasting fourth-quarter prices to drop nearly $20 per hundredweight from the second-quarter average of $133 per hundredweight, before a slight improvement in the first quarter of 2018.  end mark

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