“That’s awfully low.” Such was Matthew Diersen’s immediate reaction after seeing USDA’s numbers for hay stocks on U.S. farms as of May 1, issued late last week as part of a broader USDA Crop Production report. Diersen is an ag economist for South Dakota State University Extension.
At about 14.2 million tons, all hay stored on farms was down 34% from that of a year ago. It is the lowest May 1 stocks level on record. Hay use between Dec. 1, 2012, and May 1 of this year totaled 62.4 million tons compared with 69.3 million tons for the same period a year earlier.
Last year’s historic drought played a big role in the low stocks number. “In many areas, the limited availability of native feedstuffs last fall forced producers to feed hay to herds earlier than normal,” according to the report. “A cold, wet spring has also limited pasture growth, causing prolonged dependence on supplemental roughages and feedstuffs in portions of the Midwest.”
Hay stocks were expected to be short, but many market watchers didn’t anticipate levels this low.
“It’s certainly lower than what I was projecting,” says Diersen. “Stocks are basically depleted everywhere, even in the Northern Plains, which is usually considered an obvious surplus area.”
The numbers showing record-low stocks in Connecticut, Illinois, Michigan, Minnesota, New York, Ohio, Vermont and Wisconsin were especially eye-opening to Diersen. “The way it’s setting up, nearly the whole northeastern one-fourth of the U.S. is vulnerable. If weather takes a turn for the worse during the upcoming harvest season, there really isn’t any kind of cushion anywhere. Last year at this time, there were still some pretty good stocks to draw from in the Dakotas, Montana and Canada.”
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Low stocks won’t necessarily put upward pressure on already high hay prices, but they do limit the chance of prices falling much in the months ahead.
“If we had 5-7 million more tons in stock, normal production, even with the low hay acreage numbers we have, would cause prices to drop quite a bit. But now, with these tight beginning stocks, even a big crop isn’t likely to drop prices by much.”
Diersen’s bottom line: “If you’re a hay buyer, you’re going to want to start looking for supplies sooner rather than later and cast a pretty wide net of where you’re looking for hay. If you’re a hay seller, you’re in pretty good shape. You might want to start marketing your new crop right away to take advantage of high prices connected to concerns about the tight supply situation. But you also might want to consider building a stockpile that you can market later in the year.”
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