The USDA’s Crop Production report last week showed that US stocks of hay continued to shrink in the latest crop year, making two straight years of decline and pointing to higher prices in the new crop year.
May 1 stocks were down about 1.2 million short tons, or 7%, to 16.7 million tons from a year earlier, following a 12% decline from 2020 to 2021. Compared with two years earlier, inventory was down about 18%, or 3.7 million short tons.
May 1 is important because it’s the start of the hay crop year. But since much of the US hay inventory is stored on farm, it’s difficult to measure, a market analyst said, but since the USDA uses the same measuring profiles each year, relative changes become important.
WESTERN STATES HIT HARD
Given the extensive drought conditions experienced in western states last year, it shouldn’t be surprising that these states had significant declines in hay production, a market analyst said. Montana, for instance, was down 54%; South Dakota down 50%; Arizona down 50%; Oklahoma down 48%; North Dakota down 45%; Nevada down 42%, and Virginia down 42%.
There were some gains, though, but they were mostly in Midwest and eastern states. Colorado was up 152%; New York, up 90%; Ohio, up 71%; Utah, up 71%; Iowa, up 67%, and Indiana, up 60%.
WINTER HAY DISAPPEARANCE DOWN
Hay disappearance over the winter, measured from Dec. 1 through April 30, totaled 62.2 million tons, about 4 million less than the previous year. It was a record low disappearance for the period, eclipsing the previous low of Dec. 2012 through April 2013 of 64.4 million tons.
Winter hay disappearance appears to have set a new normal, according to Hay & Forage Grower. Prior to the 2012 drought year, disappearance was in the range of 80 to 85 million tons. But since 2012, it’s been rare to see disappearance exceed 70 million, and during the last four years, hay feeding has been less than 65 million tons.
Hay & Forage Grower said hay prices were running $80 to $150 a ton higher than a year ago. The analyst said it may be one of the cumulative number of reasons for the current rate of cow slaughter and herd reduction.
DROUGHT CONTINUES
The US Drought Monitor continues to show drought conditions in western states. Grazing conditions continue to decline.
Plus, many cattle feeders may look t0 good-quality hay to replace energy and protein from expensive corn and soybeans, Hay & Forage Grower said. The short supplies and stronger exports also could lend themselves to higher prices this year.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $140.47 to $143.60 per cwt, compared with last week’s range of $140.00 to $158.23. FOB dressed steers, and heifers went for $221.01 to $222.54 per cwt, versus $220.11 to $225.73.
The USDA choice cutout Tuesday was up $0.17 per cwt at $260.48, while select was up $2.52 at $248.19. The choice/select spread narrowed to $12.29 from $14.64 with 88 loads of fabricated product and 30 loads of trimmings and grinds sold into the spot market.
The USDA reported that basis bids for corn from feeders in the Southern Plains were unchanged at $1.55 to $1.65 a bushel over the Jul futures and for southwest Kansas were steady at even the Jul, which settled at $8.00 3/4 a bushel, down $0.08 3/4.
The CME Feeder Cattle Index for the seven days ended Monday was $155.27 per cwt down $0.73. This compares with Tuesday’s May contract settlement of $157.17, down $0.22.