Pacific Northwestern hay growers turned a profit this year, even with rent, fertilizer, fuel and other input costs on the uptick. That’s according to a recent Hay Market Snapshot report from Northwest Farm Credit Services.
Expected strong 2013 prices mean the region’s beef cattle producers will likely want to avoid marketing cattle this winter when prices are at seasonal lows. “They’ll accomplish this by finding the feed necessary to sustain their herd(s) over the winter, which should support feeder-quality hay prices and provide a strong floor to the (hay) market.”
Dry conditions and range fires could have beef producers tying up hay early in anticipation of feeding more of the crop this winter, the report also notes. As a result, beef producers who generally have excess hay to sell are likely to hold on to available supplies as a hedge against the possible loss of winter range.
But continued weakness in the dairy industry is likely to lower hay prices. “Going forward, dairy producers’ profits are dependent on milk prices outpacing rising feed costs. Unless that occurs, dairies will continue to buy hay hand to mouth and culling of herds will intensify.”
To get the best read on where milk prices might be headed, hay producers and exporters should watch U.S. dairy export volumes and prices, along with economic conditions in emerging markets, the report advises. “The global economic downturn that occurred in late 2008 reduced U.S. dairy exports, stifled global consumption growth and contributed to a worldwide milk surplus. A faltering global economy – including recession in Europe and slower economic growth in Asia – is reminiscent of market conditions faced in 2008.”