National Hay Situation and Outlook

The 2014 calendar year provided favorable growing conditions for hay producers across most of the U.S. Even drought-struck California produced more hay than anticipated, according to the USDA-NASS reports. This has contributed to a general story in the national hay complex of trending towards normal (pre 2010 and 2011 drought) production, stock levels, and prices. Hay is a highly regionalized crop, and drought can have varying impacts depending on the region. The highest hay acreage is typically in the middle of the U.S. spanning a direct line from Texas up to North Dakota. However, these are not necessarily the highest producing states. Texas, California, Missouri, South Dakota and Kansas are the top five in average total hay production for the time period of 2004-2014. U.S. hay production in 2014 was the largest since 2010, and prices, although trending slightly lower throughout the marketing year, continued to be supported by an increasing disappearance level and lagging increase in harvested acres as the industry continues to work its way back to pre-2011 drought levels. The increasing disappearance can be attributed to first a growing national dairy herd in 2014, and second the growth of the national beef herd which is forecasted to continue into 2015. Over the past 20 years harvested acres of alfalfa has been on a decreasing trend, down 24% compared to 1994. Since 2012 however, there has been a reversal of this trend and harvested acres of alfalfa have gradually increased year-over-year. Compared to calendar year 2013, 2014 recorded a 4% increase in alfalfa acres harvested, putting the total number at 18 million acres – the highest level since 2011. Looking at the same time frame for harvested acres of other hay, in the past 20 years they followed an increasing trend line until 2002 where the peak was experienced at 41 million acres. Since 2002 harvested acres have stayed in a steady range of 39 million to 41 million acres, except during the drought in 2011. Year-over-year, 2014 posted a 4% decrease in harvested acres to 38 million. Production in 2014 According to USDA-NASS Annual Crop report, national alfalfa production increased 7% in 2014 compared to 2013 to sit at 62 million tons. This was the result of a 4% increase in national harvested acres and a 3% increase in national yield. As shown in Table 1, the top 5 alfalfa hay producing states in 2014 were California, South Dakota, Idaho, Wisconsin, and Montana. Notable changes in production took place in South Dakota and Wisconsin, up 16% and 44%, respectively, in terms of production. Surprisingly, even though California experienced one of its worst droughts in history during 2014, alfalfa production only decreased by 2% in that state. National other hay production increased 1% year-over-year to 78 million tons. In 2014 other hay recorded a 4% decrease in harvested acres but a 5% increase in yield. The top 5 other hay producing states in 2014 were Texas, Missouri, Oklahoma, Kentucky, and Tennessee (shown in Table 2). The decreased production in Missouri, Kentucky, and Tennessee was the result of fewer acres harvested and lower yields. 2014 hay production numbers in Texas and Oklahoma are indicative of continued and significant improvement in production following the 2011 drought. The increase in production in Texas stemmed from a 140% increase in other hay yield compared to 2013, and Oklahoma saw a 400,000 acre increase in harvested acres with a 7% increase in yield. Other notable year-over-year total hay production changes include Kansas down 24%, Nebraska was up by 22%, Colorado up 21%, and Minnesota up by 15%. Kansas experienced a significant reduction in hay production, the result of a 450,000 harvested acres decrease and a 9% decrease in yield. Nebraska harvested an additional 80,000 acres with a 19% yield increase. Colorado’s hay production increase came from an additional 30,000 harvested acres on an 18% yield increase. Minnesota added 10,000 harvested acres and had a 15% yield increase overall. 2014/15 Prices Hay prices are tracked on a marketing year, and reported on a national monthly average basis by USDA-NASS. State specific annual average hay prices will be released in July. Increased annual hay production has helped lessen supply restrictions. Additionally most of the U.S. experienced favorable pasture and range conditions during the 2014 grazing season which allowed livestock producers to avoid sharp summer demand for hay, as seen during drought years. As indicated in the graphs below both alfalfa and other hay are following a slowly decreasing price trend, due to the reasons listed above. In the most recent Agricultural Prices report by NASS, February alfalfa hay prices were at $172 per ton, $16 per ton below year ago prices (9% decrease). Other hay prices recorded a 2% year-over-year decrease, and were $127 per ton in February, $2 per ton less than February 2014. This supports the general story in the hay complex of production and prices reverting back to historically normal levels, from the drought induced supply reductions, demand increases, and price spikes seen in the most recent years. Further, hay prices have begun the process of normalizing relative to other feedstuffs with the dramatic drop in grain (e.g. corn) and plant-based protein costs (e.g. soybean and cottonseed meal). For the crop marketing year, May through April, prices have been reported monthly through February. Seasonally, prices tend to trend up at the end of the marketing year before the first new cutting comes in. For the 2014/15 marketing year, alfalfa prices are expected to average about $195 per ton and other hay prices around $130 per ton. December 1 Stocks Hay stock numbers are released in terms of all hay, even though different states produce varying levels of alfalfa and other hay. USDA-NASS conducts two hay stock surveys each year, the most recent was December 1, 2014. Total U.S. stocks for all hay were up 3% compared to 2013. This is the largest December 1 stocks have been since 2010. Most major cattle producing regions in the U.S. recorded a year-over-year increase in December 1 stocks. Compared to 2013, the Western region is up 1% (even with the California drought), Great Plains up 7%, Southern Plains up 29%, and the Cornbelt region up 4%. The Northeast and Southeast both experienced a decrease in December 1 hay stocks compared to year ago numbers by 20% and 10%, respectively. February saw some harsh winter weather across the U.S. and notably in the cattle region of the Midwest, but March turned out to be a milder month in general. December 1 hay stock numbers support hay availability for cattle producers should they need to rely on it more, depending on how late winter and early spring weather evolve. May 1 hay stock reports will be released with the Annual Crop Production report on May 12, 2015