Bad start to the feeding season
Much of Iowa is bone dry and getting drier. Corn prices have risen sharply. At least so far, the hay prices have lagged behind the corn prices. But depending on the weather, that may not last.
When drought develops, feed management is usually the focus of livestock farming. The assessment of standing fodder and hay supplies is now crucial in planning how these resources can best be used and, if necessary, expanded.
Planning ahead can help avoid the higher feed prices typically associated with droughts. If the drought persists, inventory management may be necessary. The compromise between buying feed or liquidating animals is always economically difficult. As the saying goes: “Looking back is 20/20. Foresight is not.”
Hoping for better conditions is okay as long as you plan for the worst. A lack of planning will result in easier decisions later because there are unfortunately fewer alternatives available – and all of them can be more painful.
Worst start for forage since 2012
The hay yield is the biggest factor that can change in the short term and move hay prices. The hay yield correlates positively with the distribution area and the grazing conditions. On May 3, the pasture and reach reporting season began. On Mondays, the USDA publishes estimates of crop condition in the crop progress report compiled by the National Agricultural Statistics Service. For the week that ended June 6, 15% of Iowa pasture land was classified as poor or very poor. This is the worst start to June since 2012, when 19% of pastures were reported in poor or very poor condition. For the first week of June 2000, 38% of Iowa pastures were in poor or very poor condition.
The depiction of hay prices next to corn prices suggests a strong, predictable relationship. From July 2012 to July 2013, Iowa corn prices averaged $ 7.08 per bushel. The price of alfalfa hay produced in Iowa was $ 231 per ton. Other hay (not including alfalfa) made $ 148 per ton. The prices then fell largely synchronously until 2017. In 2017, the calendar year average for Iowa corn was $ 3.30 per bushel, alfalfa was $ 103 per ton, and other hay was $ 83 per ton. Corn prices have more than halved in these four years, while prices for other hay and alfalfa have fallen by 44% and 56%, respectively. There were slightly higher prices for the next two years before all prices fell congruently in 2020
Corn prices have since recovered. Corn prices in Iowa rose 74%, from a low of $ 3.08 in August 2020 to $ 5.35 in April 2021. Corn prices rose even higher in May. The hay prices have yet to follow the corn price rally. Other hay rose 10% from $ 88 per tonne last August to $ 97 per tonne in April. Iowa alfalfa rose from $ 121 per ton to $ 120 per ton over the same period. The corn and hay prices shown here are taken from the USDA’s monthly farm price report and represent sales from growers to first-time buyers. They are survey-based estimates and encompass all grades and grades.
Will hay follow higher corn prices? Not necessarily. Indeed, these markets are highly correlated. But correlation is not automatically the same as causality. Occasional watchers perceive that acreage can easily shift between harvests to quickly return to equilibrium price levels. However, a significant shift from hay and pasture production to maize appears unlikely. Much of the hay is perennial. Higher feed prices will make fodder crops even more valuable. Specialized hay machines can cause high upfront costs that have to be amortized over many years. In the case of pastures, it is fences, irrigation systems and multi-year pasture management that ensure a certain stability.
In most markets there are many factors that determine prices. The supply, demand and prices of hay are no different. Hay is a very regional crop. There can be dramatic differences in production and prices between states. In addition, hay is difficult to transport, which can exacerbate the supply situation.
The USDA’s May Crop Production Report included estimates of national hay stocks and hay stocks by state. The estimates are based on a survey of producers by the National Agricultural Statistics Service. On May 1, Iowa hay stocks were 430,000 tons, down 80,000 tons, or 16%, from May 1, 2020. But on May 1, Iowa hay stocks were 25,000 tons, or 6%, higher than the 2018 average- 20th At the national level, hay stocks on May 1 were 18.0 million tons, 12% less than May 1, 2020 but 7% more than the three-year average.
Headcount increases the demand for hay
The haymaking year runs from May to April, so the May 1st stocks are the starting stocks for the current year. Initial stocks suggest that increased supplemental feeding could be included.
A common measure of the feed requirement are roughage-consuming animal units (RAU), which weight different animal species according to the amount of non-grain feed consumed. Different demand segments include dairy cattle, cow veal farms, beef fattening farms, sheep and goats, horses, processing and export. The livestock marketing information center has a supply and demand balance for all hay. This year’s national hay supply for the LMIC projects will be the highest per RCAU since 2017-18.
Schulz is an animal economist from Iowa State University Extension.