Economists from the University of Missouri’s Food and Agricultural Policy Research Institute (FAPRI) say hay prices are likely to rise slightly this year but then remain flat through the end of the decade.
The projection is part of a baseline report FAPRI economists delivered to Congress last week. Legislators will use the report, compiled annually, to study the economic impact of proposed ag policy changes, including the 2012 Farm Bill.
The report, called the FAPRI U.S. Baseline Briefing Book, notes that, while hay prices have retreated from the 2008-09 peak, some price recovery is expected in the 2011-12 marketing year. A key factor: Hay supplies are likely to be tighter as farmers and ranchers convert hay acres to grain and cotton crops.
Further out on the 10-year timeline, the Missouri economists say, projected reductions in U.S. cattle numbers between now and 2013 will likely limit upward pressure on hay prices. Beyond the 2011-12 marketing year, FAPRI projects hay production and disappearance will likely flatline for the rest of the decade. That assumes weather and other factors do not vary widely from historical averages.
One caveat: The economists point out that hay markets are more fragmented than markets for most other ag commodities, so trends in national average prices may not reflect local conditions.
See the report.