Digest Highlights

Hay acreage could be lowest in more than a century

With spring planting either delayed or prevented, the USDA’s Crop Acreage report leaves plenty of questions left to be answered in 2019. One thing we did learn from the report: U.S. hay acreage could be the lowest in 111 years.

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Dave Natzke
Editor / Progressive Dairy

Producers intend to harvest 52.8 million acres of all hay in 2019, down less than 1% from 2018. If realized, this will represent the lowest total hay harvested area since 1908.

The decrease in acreage is due to a 1% decrease in all “other” hay acreage compared to 2018, to 35.9 million acres. Acres of alfalfa and alfalfa-mixture hay are estimated at 16.8 million, up 1% compared with 2018.

Record-low all-hay harvested area is expected in California, Illinois, Maine, Michigan, New York, Ohio, Pennsylvania, Vermont, Washington and West Virginia in 2019.

Among the 24 major dairy states, all hay was expected to be harvested from about 27.7 million acres, down 262,000 acres from 2018. Area devoted to other hay was estimated at 16.6 million acres, down 460,000 acres, while alfalfa/alfalfa-mixture hay harvest area was set at just over 11 million acres, up about 198,000 acres.

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Among dairy states, all hay acreage is expected to decrease a combined 625,000 acres in California, Idaho, Kansas, Texas and Washington, led by a 275,000-acre decline in Texas. While Texas alfalfa/mixture hay acreage is expected to increase, the other four states will be down 170,000 acres.

Largest increases in all hay area are in Iowa (+140,000) and Minnesota (+80,000), thanks to increases in alfalfa/mixture acreage of 80,000 and 130,000 acres, respectively. South Dakota was expected to boost alfalfa/mixture hay by about 50,000 acres.

Producers may be able to make up for some of the hay acreage decline by harvesting cover crops from “prevent plant” acreage.

Read: USDA Risk Management Agency grants ‘prevented plant’ cover crop harvest flexibility.

USDA Acreage report leaves questions

The USDA’s Acreage and Grain Stocks reports, both released June 28, leave plenty of uncertainty in grain markets too, according to Todd Hubbs, ag economist with the University of Illinois. That uncertainty could remain throughout the summer.

Crop data reported in the Acreage report was collected in early June. Due to planting delays and the likelihood some acreage will never be planted, the USDA’s National Agricultural Statistics Service will collect additional acreage information in 14 states in July, updating estimates for corn and soybeans in the Crop Production report released on Aug. 12.

Here’s a summary of what the June 28 reports revealed:

  • Corn: Planted area for all purposes is estimated at 91.7 million acres, up 3% from last year. Area harvested for grain, at 83.6 million acres, is up 2% from last year. Corn stocks in all positions on June 1 totaled 5.2 billion bushels, down 2% from a year earlier.

  • Soybeans: Planted area for 2019 is estimated at 80 million acres, down 10% from last year. This represents the lowest soybean planted acreage in the U.S. since 2013. Area for harvest, forecast at 79.3 million acres, is also down 10% from 2018. Soybeans stored in all positions on June 1 totaled 1.79 billion bushels, up 47% from June 1, 2018.

Interest rates headed lower?

Meeting in June, the Federal Reserve voted to keep interest rates steady, but signaled it is open to lower rates in the last half of 2019 on signs that the U.S. economy is slowing.

Fed Chair Jerome Powell stated that “an ounce of prevention is worth a pound of cure,” indicating that it will not wait until the economy is showing significant distress before reversing direction on rates. Instead, it will attempt to pre-empt the slowdown.

The latest Quarterly Rural Economic Review from the CoBank Knowledge Exchange Division noted the current range of the Fed funds rate is 2.25%-2.5%, but could be lowered to 1.75%-2% by September. Of the 17-member Federal Open Market Committee, seven indicated they expect two rate cuts this year.

In its second-quarter ag lender survey report, the Dallas district of the Federal Reserve Bank said average interest rates on fixed-rate farm operating, intermediate and farm real estate loans were steady to lower than the previous quarter. However, quarterly average interest rates on variable-rate loans were up for feeder cattle, farm operating and intermediate-term loans.

Larger cottonseed harvest forecast

With forage supplies a concern, cottonseed may be able to fill some of the dairy feed void if weather-related disruptions are minimized.

At about 13.7 million acres, the USDA’s Acreage report estimated 2019 cotton acreage to be about 3% lower than 2018. However, the 2018 crop year was marked by large acreage abandonment due to drought. Of 14.1 million acres planted to cotton last year, about 10.2 million acres were harvested.

With fewer abandoned acres, the cotton industry is anticipating its largest crop in more than a decade. Early projections put the 2019 cotton crop at 22 million bales, which translates to nearly 6.9 million tons of whole cottonseed. Of that, about 4.3 million tons will be available for feeding to dairy cows, said Tom Wedegaertner, director of cottonseed research and marketing, Cotton Incorporated.

The cottonseed supply for the feed industry could see a year-over-year increase of around 750,000 tons, said Nigel Adcock with Cottonseed LLC. That total hinges on any weather disruptions, he warned. Recent weather patterns have resulted in the crop being rated slightly worse than the five-year average, with Kansas, North Carolina and Texas most affected.

According to Dr. John Robinson, Texas A&M University professor and extension cotton marketing specialist, above-average rain early this spring pushed Texas crop producers to switch about 330,000 acres intended for corn over to cotton. Even with that acreage switch, Texas cotton acres were the biggest losers in the latest USDA Acreage report, down 600,000 acres from a year ago. However, last year, 7.8 million acres of cotton were planted in Texas, but just 4.4 million acres were harvested.

Georgia’s 2019 cotton acres were reduced by 80,000, while the mid-South states had an overall gain of 295,000 over last year. Cotton acreage is expected to be higher in 10 of 17 major cotton-producing states.

“Moisture availability should be beneficial to the cotton crop and minimize crop abandonment,” Robinson said, adding that “uncertainty still remains about how much 2019 cotton will get planted due to wet weather and flooding.”

Current prices across Southeast cottonseed markets have been in a holding pattern for the past couple of weeks, as it appears recent price increases may have stymied any spot demand, even to areas reporting forage shortages, Adcock said. In the mid-South, deliveries to dairies in the Upper Midwest have risen over $30 per ton in the past month, and backlogs on river barge traffic could take months to return to normal. California dairies are also paying higher cottonseed prices.

May cull cow prices improve

U.S. average cull cow prices improved in May, according to the USDA’s Ag Prices report.

May 2019 cull cow prices (beef and dairy combined) averaged $65.60 per hundredweight (cwt), up $4.30 from April and the highest average since July 2018. However, average prices through the first five months of 2019 are down about $5.75 per cwt from the same period a year ago and the lowest for January-May average since 2010.

Global Dairy Trade index lower

The index of Global Dairy Trade (GDT) dairy product prices posted another small decline during the July 2 auction. While the price for skim milk powder rose, prices for most other major product categories were lower:

  • Skim milk powder was up 3.2% to $2,430 per metric ton (MT).
  • Cheddar cheese was down 1.5% to $3,756 per MT.
  • Butter was down 4.8% at $4,339 per MT.
  • Whole milk powder was unchanged at $2,969 per MT.

The next GDT auction is July 16, 2019.

Western Dairy Center announces new director

Eric Bastian, Twin Falls, Idaho, has been named director of the Western Dairy Center (WDC), headquartered at Utah State University (USU), Logan, Utah.

Raised on a central Utah dairy farm, Bastian earned a bachelor’s degree in dairy science at USU. After earning M.S. and Ph.D. degrees in nutrition and food sciences, he did postdoctoral work in Denmark at the Danish Government Dairy Research Institute and at USU.

Bastian led the research and development team at Glanbia Nutritionals for 18 years. As vice president of industry relations for Dairy West, Bastian worked with former WDC director Donald McMahon to develop the BUILD Dairy program (Building University-Industry linkages through Learning and Discovery).

Through the BUILD Dairy program, professors, researchers, students and dairy food industry companies and organizations collaborate to enhance education and dairy industry career development opportunities. The WDC network includes Boise State University, Brigham Young University, Texas A & M University, University of Utah, Utah State University, University of Idaho, Oregon State University, Washington State University and Weber State University.  end mark

Dave Natzke