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Hay Production Economics and Outlook

Dr. Curt Lacy Extension Economist-Livestock. Hay Production Economics and Outlook. This morning’s map. Current situation Inputs Outlook for 2011. Hay prices have rallied some in recent months. Alfalfa hay prices are stronger also. Livestock Marketing Information Center

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Hay Production Economics and Outlook

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  1. Dr. Curt Lacy Extension Economist-Livestock Hay Production Economics and Outlook

  2. This morning’s map • Current situation • Inputs • Outlook for 2011

  3. Hay prices have rallied some in recent months

  4. Alfalfa hay prices are stronger also Livestock Marketing Information Center Data Source: USDA-NASS

  5. Outlook Input situation and outlook

  6. Factors at Work Inputs Prices Received Number of hay consuming units. Economy Acres of hay • Demand for fertilizers • Fuel costs • Equipment costs

  7. Input Outlook for 2011 – Fuel • Tightening Supplies • Increasing demand • Political unrest • Steady to higher prices for 2011 and 2012

  8. Fertilizer Prices 1997-2011

  9. Fertilizer Factors • More corn acres • Increasing South American demand • Strength of US dollar • Price of natural gas = Steady to higher fertilizer prices in 2011-2012

  10. Estimated 2011 Hay Production Costs Source: University of Georgia

  11. Outlook Projected Supply and Demand

  12. ALL HAY PRODUCTION 2010(1000 Tons)

  13. Tighter US stocks led to higher prices this winter Livestock Marketing Information Center Data Source: USDA-NASS, Compiled & Analysis by LMIC

  14. Livestock Marketing Information Center Data Source: USDA-NASS, Compiled & Analysis by LMIC

  15. Southeastern Hay Acreage has continued to increase

  16. Other fundamental factors

  17. Current high prices for cattle suggest herd expansion before long.

  18. Inventories of Other Animals

  19. Numbers of Operations

  20. Numbers of Operations

  21. Summary of Livestock Factors • High beef cattle prices are good for at least two reasons: • Suggests herd expansion is coming soon • Makes it more economical to feed cows hay • Dairy herd continues to consolidate • Larger farms tend to be more specialized and willing to contract with local or regional growers. • Increasing emphasis on forage-based systems increases demand for hay or baleage. • Rapidly expanding goat and sheep market provides another often overlooked target market.

  22. Hay exports have become more important Livestock Marketing Information Center Data Source: USDA-FAS, Compiled & Analysis by LMIC

  23. Livestock Marketing Information Center Data Source: USDA-FAS, Compiled & Analysis by LMIC

  24. Livestock Marketing Information Center Data Source: USDA-FAS, Compiled & Analysis by LMIC

  25. Will hay acres decline in 2011?

  26. US Alfalfa Seedings 2008-2010

  27. Projected Prices for 2011

  28. Estimated 2011 Hay Production Costs Source: University of Georgia

  29. Summary • 2011 could be a very interesting one for hay producers. • Tight supplies and an improving economy will likely increase demand. • However, higher input prices could reduce costs enough to lower profits.

  30. Dr. Curt Lacy Extension Economist-Livestock clacy@uga.edu Questions?

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