Hay Production Economics and Outlook
Dr. Curt LacyExtension Economist-Livestock
This morning’s map
Current situation Inputs Outlook for 2011
Hay prices have rallied some in recent months
2005
2006
2007
2008
2009
2010
2011
$-
$20.00
$40.00
$60.00
$80.00
$100.00
$120.00
Good Quality Bermuda Hay Prices ($/ton), 4x5 RollSoutheastern Weekly Prices, 2005-2011
Good Quality Bermuda Hay Prices
$/t
on
MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR APR105
110
115
120
125
130
135
ALFALFA HAY - MONTHLY AVERAGE PRICEReceived by Farmers, U.S., Crop Year
Avg. 04/05-08/09
2009/10
2010/11
$ Per Ton
G-P-1202/28/11
Livestock Marketing Information CenterData Source: USDA-NASS
Alfalfa hay prices are stronger also
OutlookInput situation and outlook
Factors at Work
INPUTS
Demand for fertilizers Fuel costs Equipment costs
PRICES RECEIVED
Number of hay consuming units.
Economy Acres of hay
Input Outlook for 2011 – Fuel
06/1
6/06
11/0
3/06
03/2
3/07
08/1
0/07
12/2
8/07
05/1
6/08
10/0
3/08
02/2
0/09
07/1
0/09
11/2
7/09
04/1
6/10
09/0
3/10
01/2
1/11
$0.00
$1.00
$2.00
$3.00
$4.00
$5.00
Spot Diesel Price ($/gal), US Gulf Coast
June 2006-March 2011
Spot Diesel Price, US Gulf Coast
• Tightening Supplies• Increasing demand• Political unrest• Steady to higher
prices for 2011 and 2012
Fertilizer Prices 1997-2011
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
Feb
2010
Mar
201
1$100
$200
$300
$400
$500
$600
$700
$800
$900
$1,000
Nitrogen (AN) Phosphorous (DAP) Potash (Muriate)
$/t
on
Fertilizer Factors
More corn acres Increasing South
American demand Strength of US
dollar Price of natural
gas= Steady to higher fertilizer prices in 2011-2012
Estimated 2011 Hay Production Costs
Alfalfa Hybrid Bermuda Mixed Hay $-
$100.00
$200.00
$300.00
$400.00
$500.00
$600.00
$700.00
$/a
cre
Source: University of Georgia
OutlookProjected Supply and Demand
ALL HAY PRODUCTION 2010(1000 Tons)
5,500 to 10,800 (9)3,800 to 5,500 (6)2,500 to 3,800 (8)1,800 to 2,500 (8)
500 to 1,800 (8)0 to 500 (9)
1872
2476 2681
82364040
CT 102
DE 46
768
1625
5460
1916 1894
3760
5700 5704
1260
221
MD 488
MA 1362730
5400
1610
7512
7512
63491546
89
NJ 203
1333
2418
1822
5321
2871
5953
5953
3400RI 16
720
7335
4146
10800
2512
VT 323
2184
3420
952
4526
2467
2006 2007 2008 2009 201040
50
60
70
80
90
100
110
120
U S HAY STOCKS AND PRODUCTIONCrop Year
December 1 Hay Stocks
Alfalfa Hay Production
Other Hay Production
Mil. Tons
Livestock Marketing Information CenterData Source: USDA-NASS, Compiled & Analysis by LMIC
Tighter US stocks led to higher prices this winter
U S ALL HAY STOCKSDecember 1
75
85
95
105
115
125
1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009
Mil. Tons
G-NP-2202/02/11Livestock Marketing Information Center
Data Source: USDA-NASS, Compiled & Analysis by LMIC
Southeastern Hay Acreage has continued to increase
1974
1977
1980
1983
1986
1989
1992
1995
1998
2001
2004
2007
2010
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
Southeastern US Acres of Other Hay and All Hay
1974-2010
Other HayAll Hay
Acre
s (
thou
s.)
Other fundamental factors
C-N-0201/29/10
Current high prices for cattle suggest herd expansion before long.
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
25000
30000
35000
40000
45000
50000
JANUARY 1 “BEEF COW FACTORY’U.S., Annual
Replacement Heifers
Beef Cows
Mil. Head
Inventories of Other Animals
040,00080,000
6735
83796 74008
8952
Inventories of Non-Bovine Forage Consuming Livestock in Georgia
2002 vs. 2007
Nu
mb
er
of
Head
Numbers of Operations
Dair
y F
arm
s
Ew
es
All G
oats
Mule
, B
urr
os
&
Donkeys
Alp
aca
s
Llam
as
Rabbit
s0
2000
4000
6000
Dairy Cows and Other Types of Hay Consuming Livestock
2002 vs. 2007
Nu
mb
er
of
Op
era
tion
s
Numbers of Operations
Beef Cattle Horses & Ponies0
5,000
10,000
15,000
20,000
25,000
Beef Cows and Horses2002 vs. 2007
Nu
mb
er
of
Op
era
tion
s
Summary of Livestock Factors High beef cattle prices are good for at least
two reasons: Suggests herd expansion is coming soon Makes it more economical to feed cows hay
Dairy herd continues to consolidate Larger farms tend to be more specialized and
willing to contract with local or regional growers. Increasing emphasis on forage-based systems
increases demand for hay or baleage. Rapidly expanding goat and sheep market
provides another often overlooked target market.
U.S. HAY & HAY PRODUCT EXPORTSAnnual
0
200
400
600
800
1000
1200
1400
1600
1800
2000
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Metric Tons
OtherHay
AlfalfaHay
AlfalfaCubes
AlfalfaMeal &Pellets
02/15/11
Livestock Marketing Information CenterData Source: USDA-FAS, Compiled & Analysis by LMIC
Hay exports have become more important
OTHER HAY EXPORTSAnnual
0
200
400
600
800
1000
1200
Japan Taiwan Korea
Metric Tons
2006
2007
2008
2009
2010
02/15/11Livestock Marketing Information CenterData Source: USDA-FAS, Compiled & Analysis by LMIC
ALFALFA HAY EXPORTSAnnual
0
100
200
300
400
500
600
700
800
Japan Korea Taiwan UAE
Metric Tons
2006
2007
2008
2009
2010
02/15/11Livestock Marketing Information CenterData Source: USDA-FAS, Compiled & Analysis by LMIC
Will hay acres decline in 2011?
Alab
ama
Color
ado
Georg
ia
Indi
ana
Loui
sian
a
Michi
gan
Misso
uri
New H
amps
hire
1/
Oklah
oma
Sout
h Car
olin
a
Texa
s
Was
hing
ton
0
5000
10000
15000
20000
25000
30000
Other HayAlfalfaCorn
US Alfalfa Seedings 2008-2010
AZ CO ID IA ME M
IMT
NH NYOH PA TX VA W
I0
50
100
150
200
250
300
350
400
450
500
200820092010
2008 = 2.70 million acres2009 = 2.67 million acres2010 = 2.55 million acres
Projected Prices for 2011
Item U.S. All HaySoutheastern
All Hay
Stocks May 1 20.60 3.52Total Production 143.80 25.34Total Supply 164.40 28.86Disappearance 146.50 24.88-25.8Ending Stocks 17.90 3.06-3.98
Season Average Price
$131 per ton
$125-$135 per ton
Good quality Bermuda Hay
Estimated 2011 Hay Production Costs
Alfalfa Hybrid Bermuda Mixed Hay $-
$20.00
$40.00
$60.00
$80.00
$100.00
$120.00
$140.00
$/a
cre
Source: University of Georgia
Summary
2011 could be a very interesting one for hay producers.
Tight supplies and an improving economy will likely increase demand.
However, higher input prices could reduce costs enough to lower profits.
