Fall is settling in, and with it comes a better idea of what path prices will take over the winter. While July prices decreased slightly for the most part, there’s still many factors that could play into the settling of hay prices. Take a closer look what prices and conditions in each region in the Progressive Forage Forage Market Insights column as of Sept. 10, 2024.
Moisture conditions fall short
Overall U.S. Drought Monitor maps indicate drought areas that are once again on the rise. As of Sept. 3, approximately 31% of U.S. hay-producing acreage (Figure 1) was considered under drought conditions, with 21% being reported the month prior. The area of alfalfa hay-producing acreage (Figure 2) under drought conditions was reported to be 30%, with 25% the month prior.
A snapshot of hay prices
Price data for 27 major hay-producing states is mapped in Figure 3, illustrating the most recent monthly average price and one-month change. The lag in USDA price reports and price averaging across several quality grades of hay may not always capture current markets, so check individual market reports elsewhere in Progressive Forage.
Dairy hay
The top milk-producing states reported a price of $237 per ton of Premium and Supreme alfalfa hay in the month of July, a $19 decrease from June. The price is $51 lower than what was reported in July 2023 (Table 1).
Exports
The export forecast for fiscal year 2024 is at $173.5 billion, up $3 billion from May’s projection. This is mostly due in part to higher horticultural and grain sales. Agricultural imports are forecast at $204 billion, up $1.5 billion from May’s projection as the U.S. economy continues to strengthen.
Regional markets
- Midwest: In Nebraska, demand is light while hay sales are holding steady in a light test. Alfalfa producers are finishing up the third cutting, and grass and meadow hay is still being baled in rounds.
In Kansas, hay movement is steady with demand remaining light.
In South Dakota, demand is slower than normal for this time of year but has increased over the past few weeks. Over half the state remains in below-average moisture conditions and in need of moisture.
In Missouri, cooler temperatures are beginning to sweep across the state and hay movement remains sluggish. Producers are continuing to add supply to late-season cuttings. Hay stocks are much more optimistic than they were a year ago, and some combines are beginning to roll as the fields dry out.
- East: In Alabama, hay prices are reported as steady with both moderate supply and moderate demand.
In Pennsylvania, alfalfa and grass mixes are selling weak while orchardgrass and wheat straw sales are steady.
- Southwest: In California, retail hay demand is steady to good while dairy hay was reported moderate. Export hay is in light demand. Sunflower, safflower, and corn and rice fields are being dried in preparation to begin harvest mid- to late September.
In New Mexico, hay is being sold steadily with not much movement. Alfalfa is completed with at least the third cutting, with more cuttings being reported in some parts of the state. Hay and roughage supplies were short in 21% of the state.
In Oklahoma, hay trade is almost at a complete standstill with a lot of 2023 hay still in stock.
In Texas, hay prices are mostly steady to weak across all regions and hay trade is limited to light with moderate demand. Rainfall in most parts of the state has been present; however, exceptional drought conditions are still present and are expanding.
- Northwest: In the Columbia Basin, all grades of timothy and alfalfa are weak. Exporters are reporting higher-than-normal amounts of timothy hay being offered.
In Montana, hay sold steady with new crop being available, continuing to slow movement. Most producers are experiencing light interest, as excess carryover from 2023 is causing slow movement in new-crop hay.
In Idaho, demand for all hay is slower but movement is slowly beginning to pick up.
In Colorado, trade activity was moderate on light demand and hay sales were progressing steadily.
In Wyoming, bales of hay were selling steady on a thin test, while some producers are donating hay to those affected by wildfires.
Other things we are seeing
- Dairy: Class prices announced on Sept. 5 were: At $22.05 per hundredweight (cwt), the August Class II milk price is up 23 cents from July and $2.14 more than August 2023. It’s the highest since December 2022. The August Class III milk price erased a small decline in July, rising 87 cents to $20.66 per cwt, $3.47 more than August 2023 and the highest since November 2022. At $21.58 per cwt, the August 2024 Class IV milk price is up 27 cents from July and is $2.67 more than August 2023. It’s the highest since December 2023.
Potentially affecting FMMO pooling, the August 2024 Class IV milk price is 92 cents more than the month’s Class III milk price, the smallest gap since September 2023.
Supporting blend price strength, the August advanced Class I base price was previously announced at $21.32 per cwt, up 21 cents from July 2024 and $4.70 more than a year earlier. It’s the highest Class I base price since January 2023.
- Cattle: The outlook for 2024 beef production is raised 81 million pounds from last month to 26.736 billion pounds. This reflects a slightly faster-than-expected pace of cattle slaughter projected through the end of the year. The NASS Cattle on Feed report for July 2024 estimated the July 1 feedlot inventory at 11.304 million head, less than 1% above 11.243 million head in the same month last year. Based on the report, feedlot net placements in June were more than 6% lower year over year at 1.507 million head. The increase in net placements from a year ago was slightly more than anticipated.
- Interest rates: Quarterly lender surveys from Chicago, Dallas and Kansas City Federal Reserve districts reveal interest rates on most agricultural loans decreased slightly during the second quarter of 2024, with the average of all rates at 8.5%, although in some cases reaching higher than 9%.
According to lenders, demand for agricultural loans increased in quarter two despite interest rates hovering at multidecade highs. Experts anticipate greater lending volumes and elevated interest rates may be taxing for those highly leveraged borrowers.
Other feed outlooks
The USDA’s WASDE and Crop Production reports provided potential insights into dairy feedstuff supplies and prices:
- Corn: This month’s 2024-25 U.S. corn outlook called for larger supplies, greater domestic use, greater exports and smaller ending stocks. Corn production for 2024-25 is forecast at 15.1 billion bushels, up 47 million from last month as a 0.7-million-acre decline in harvested area is more than offset by an increase in yield. Although down 1% from 2023, if realized it would be the third-highest production for grain on record for the U.S. Based on conditions as of Aug. 1, the yield is forecast at a record-high 183.1 bushels per acre and is 2.1 bushels higher than last month’s projection and up 5.8 bushels from last year’s final estimate of 177.3 bushels. Among the major producing states, yields are forecast above a year ago in Illinois, Indiana, Iowa, Missouri, Nebraska and South Dakota. Yields in Ohio are forecast below a year ago. At $4.20 per bushel, the projected season-average corn price received by producers was 10 cents lower from the July forecast and is down 45 cents from the 2023-24 average of $4.65 per bushel.
- Soybeans: This month’s 2024-25 U.S. soybean forecasts includes higher production, exports and ending stocks. Soybean production is projected at 4.6 billion bushels, up 154 million on higher area and yield. Harvested area, forecast at 86.3 million acres, is up 1 million from July. Based on conditions as of Aug. 1, yields are expected to average a record high of 53.2 bushels per acre, up 1.2 bushels from last month and up 2.6 bushels from 2023. Soybean supplies for 2024-25 are projected at 4.9 billion bushels, up 11% from last year. The 2024-25 U.S. season-average soybean price is forecast at $10.80 per bushel, down 30 cents from last month and down $1.70 from the average price of $12.50 per bushel in 2023-24. Soybean meal prices were lowered to $320 per short ton, down $70 from the 2023-24 average of $390 per ton and $132 less than the 2022-23 average of $452 per ton.
- Cottonseed: As a predictor of cottonseed availability, 2024-25 harvested cotton acreage was forecast at 8.63 million acres, up more than 2.19 million acres and 34% from 2023-24. Cotton production decreased to 15.11 million 480-pound bales, up 25% and about 3 million bales from 2023-24. Based on conditions as of Aug. 1, yields are expected to average 840 pounds per harvested acre, down 59 pounds from 2023. That would yield 4.6 million tons of cottonseed, up from 3.64 million tons in 2023.
