Hay and Feedstuffs Outlook

Dr. Curt Lacy

Extension Economist-Livestock

Monthly SE Hay Prices

$40.00

$50.00

$60.00

$70.00

$80.00

$90.00

$100.00

$110.00

1999

2006

Price

Monthly SE Hay Prices

$40.00

$50.00

$60.00

$70.00

$80.00

$90.00

$100.00

$110.00

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2001-2005 2006 2007

103.99 million tons total

+7.70% vs. 2006

U.S. Hay StocksDec 1

50

60

70

80

90

100

110

120

130

1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005

Mill

ion

s o

f to

ns

2007 Acres +1%

2007 Yield +4.5%

2007 Production +5.5%

1.39 million tons

Projected Supply, Utilization and Prices for U.S. and Southeastern Hay

U.S.

(million tons)

Southeastern U.S.

Million TonsStocks May 1 15.0 1.5

Total Production 155.4 13.6

Total Supply 170.4 15.1

Disappearance 151.4 17.6

Ending Stocks 19.0 (2.5)

Season Average Price $115.0 $85-$125

Grass hay price

Hay Profitability

Fertilizer Prices 1997-2006

$100

$150

$200

$250

$300

$350

$400

$450

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

$/

ton

Nitrogen (AN) Phosphorous (DAP) Potash (Muriate)

Nitrogen prices have increased 76% since 2002

Fuel Prices 1997-2006

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

$/

Gallo

n

Diesel (bulk)

Diesel prices are up 145% since 2002

Impact of Fuel & Fertilizer Prices on Cost of Production

$20$30$40$50$60$70$80$90

$100$110

2002 2008

Hay Variable Cost ($/ ton) Hay Fixed Cost ($/ ton)

Projected Returns for Hay Production 2008

Item Variable Costs Total Costs

Net Returns ($/acre)

$232.50 $27.08

% Chance of Obtaining

83% 46%

Breakeven Price $66.81 $104.79

Based on 7 ton yield

Outlook for Other FeedstuffsCorn SBM

(48%)WCS CSM

(41%)

Beg. Stocks 1.304 351 489 63

Production +Imports

14.393 43,649 6,596 1,205

Disappearance 12.955 43,700 6,685 1,218

Ending Stocks 1.438 300 400 50

Season Price 3.70-4.30

National Price

303-335

Decatur, IL

175-250

Price Paid

202-235

Memphis, TN

Other Key Points Byproducts derive more of value from their

economic substitute more than supply. There is a difference in QUANTITY and

QUALITY of hay available. Horse slaughter ban is/will have impact.

Summary Hay supplies will continue to be extremely tight. High input prices will likely limit much grass hay

expansion. High hay prices will entice other sources of hay to

enter the market. Longer term, we may see some price moderation

but probably not back to previous levels