Like much of the rest of the CattleFax Outlook Seminar held in conjunction with the NCBA Industry Convention Feb. 2 in New Orleans, CattleFax Vice President of Research and Risk Management Services Mike Murphy’s message about feed prices and availability for the coming year was cautiously optimistic. Even as the end appears to be in sight for countless farmers and ranchers who have dealt with historic drought conditions across the country the past couple of years, the economic effects of that drought remain.
“As we look forward, the farmer is dealing with even smaller margins than a year ago,” Murphy said. “[Feed price and availability] is really going to come down to yield for the 2023 crop.”
As of Dec. 1, on-farm hay stocks were down 9% from year-ago numbers at 71.9 million tons. Nationwide, hay prices averaged $216 per ton in 2022. Several principal crops – including corn, soybeans and wheat – saw a noticeably smaller-than-normal national yield in 2022. Murphy said he expects virtually no change in total acreage of feed crops in 2023, and the cattle industry should keep a close eye on yield numbers as the season progresses.
“I expect we are going to see things a lot more favorable for corn availability and prices [for the cattle industry],” Murphy said.
Despite 2022 U.S. hay production being at its lowest level since 1959, Murphy emphasized that may not be the alarm bell it appears to be for the feeding sector going forward. Due to one of the biggest liquidations of the U.S. cow herd in history last year, those low hay stocks likely won’t equate to extreme scarcity. A smaller cow herd requires less hay, which should result in climbing hay stocks and lower hay prices.
“Hay prices will likely continue to be high in the first part of 2023,” he said, “but we expect weather patterns to improve pasture conditions as early as this spring, which should help stabilize and soften hay prices throughout the year.”
With big corn crops expected in China and Brazil in 2023, global supply should be adequate to meet global demand. Ethanol production has slowed – and corn demand with it – due in part to high fuel prices and an increase in remote employment. As mentioned above, U.S. cattle supplies have declined, but hogs have remained fairly steady, with a slight increase in poultry. All in all, CattleFax data indicates corn stocks-to-use will remain relatively unchanged at just under 9% and will continue to support the market above $6 per bushel, providing resistance near $7.50 into the summer, with a yearly average price settling in around $6.50 per bushel.
