US hay production peaked in the late 90’s and has been in steady decline since, particularly in the Corn Belt region. Midwest livestock herds have declined and the profits of competing crops more easily bid marginal acres away. However, tighter budgets last year saw a slight increase in hay acres, especially across the Great Plains states, that collective increased hay acreage by 410,000 acres. However, hay yields across the Plains and Midwest were lower, with ND yields dropping 22% year over year, while yields in SD were off 13%, and there was a 16% decline in TX yields. In the Cornbelt, yields declined in every state, except IL. Regional production was off 6% in the Western states, just 2% lower across the Great Plains, while hay production in the S Plains fell 11% year over year.
NASS estimated total hay acres in 2017 at 53.8 Mil Acres, a less than 1% increase from the previous year, but the 2nd increase of the last decade. However that slight increase in production was more than offset by a drop in the national average hay yield. Total US hay production at 131.5 Mil tons was the lowest since the 2012 drought, and the 2nd lowest total since 1980. Back in January, NASS reported that December 1st hay stocks were off 10% from a year ago at 86 Mil tons, or the 2nd lowest total since 1977. And while stocks are historically tight, the first cutting of hay for much of the US is still months away. The chart shows Dec-May hay usage has averaged near 69 Mil tons since 2012, and totaled 71.5 Mil tons a year ago. A similar usage rate this year would draw May 1 stocks back near the record low that was set in 2013, following the 2012 drought.
In early 2017 the US national average hay price was near even with the national average corn price. However, hay prices spiked last spring as the N Plains drought began to intensify and it became clear that US forage supplies would be in decline. Hay has held a $20-25/ton price premium to corn, with the Feb Agriculture Price report on Tuesday showing a national average all hay price of $139/ton versus the corn price of $117.50/ton ($3.29/bu). Compared to a year ago, the largest increase in all hay prices was noted across the Central and Northern Plains states, where prices ranged from 116% of a year ago in N Dakota, to 140% of last year in both KS and SD. New crop hay supplies and pasture availability are still several months and we expect hay prices will maintain premium to corn, at least until new crop supplies come available.
