Last week’s hay stocks report from USDAbrought few surprises for most market observers. At 90.7 million tons, all-hay stocks on U.S. farms as of Dec. 1 were at their lowest levels since 1988 and 11% lower than they were a year ago.
“That’s about where I think everybody expected it to be,” says Matt Diersen, ag economist with South Dakota State University Extension.
Stocks were down throughout much of the country’s midsection, compared to those of a year ago. Texas and Oklahoma, hit hard by the prolonged 2011 drought, saw their lowest Dec. 1 stock levels since 1985. Texas had just 3.8 million tons of hay on hand, down from 9.5 million tons a year earlier. In Oklahoma, stocks totaled 2.8 million tons, down from 4.5 million tons the previous December.
South Dakota and North Dakota represented the only real bright spot in the overall stocks picture, according to Diersen. Both states had significant year-to-year increases.
“That was a little bit surprising,” he says. “A lot of it has to do with the fact that production figures in both states were revised upward from USDA’s Oct. 1 forecast. A lot of hay in the region was harvested later than expected.”
Even so, the stocks numbers for the two states might be misleading. Diersen speculates that a lot of hay reported as being stored on farms there, particularly in South Dakota, is already spoken for.
“It’s a guess on my part. But from what I’ve been hearing, a lot of that hay has either already been sold and is just waiting to be shipped or people intend to use it on-farm to feed livestock brought in from the Southern states because of the drought. Either way, I don’t think you can pick up the phone right now, make a call to South Dakota, and expect to find a lot of hay for sale.”
Coupling the low stocks with the likely disappearance of hay between now and May 1, when the next hay-stocks numbers are gathered, sets up an extremely tight supply situation just ahead of this year’s growing season.
“In the last 10 years or so, it’s been unusual to use less than 80 million tons between Dec. 1 and May 1,” he says. “If that holds true this year, we’ll only have 10 million tons to get us from May 1 to June 15 or so, when the new crop starts coming in. That’s just not a lot of hay. Livestock producers are going to have to substitute with other feeds to stretch the hay supply. That’s going to continue putting upward pressure on the price of hay.”