Hay prices aren’t likely to decline sharply in the year ahead, says ag economist Matt Dierson after reviewing last week’s USDA Prospective Plantings report.
U.S. growers intend to harvest 57.3 million acres of all hay in 2012, according to the report. While USDA estimates that as an increase of 3% from last year’s record-low 55.6 million harvested acres, it’s basically an “apples-to-oranges comparison,” says Diersen, with South Dakota State University Extension. “On the surface, it looks like we’ll be adding a lot of hay acres, but that’s really not the case. A fair amount of acres were abandoned or not harvested last year because of the drought.”
For a more accurate comparison, market watchers will want to look at the March 2011 Prospective Plantings report numbers indicating that producers intended to harvest hay from 59 million acres. “At 57 million acres, this year’s projected acreage will still be one of the smallest national acreage totals in recent history.”
The 2012 hay-acreage intentions for Texas and Oklahoma, while up 19% and 16%, respectively, from last year’s harvested acres, are down sharply from year-ago intentions, Diersen notes. “We’re not going to see them rebounding 100% this year. It’s going to take awhile for them to come back from the drought.”
Couple this year’s small acreage with expected tight carryover hay stocks, and the stage is set for another year of relatively high prices. “Bottom line, there’s no real relief in sight for hay buyers. We should see prices come down from this past year’s record highs. But we’ll still have a hard time getting prices down to where they were two years ago. We still need a bumper crop somewhere along the way to take pressure off price levels in general.”