Market analyst talks potential for 2020 hay markets

Josh Callen, market analyst for The Hoyt Report, of Twin Falls, Idaho, led off the first of three High Plains Journal Alfalfa U events with a look back at the 2019 alfalfa markets and what’s in store for 2020. The Alfalfa U series of events kicked off in St. George, Utah, Feb. 11.

2019

Callen said hay markets in 2019 were pretty steady. Prices for supreme alfalfa hay delivered into dairies averaged $279 for most of the year, he said, which was down about $6 from 2018, but still prices stayed pretty steady until the end of 2019.

Part of that was dairies were really strong in what they were willing to pay and kept that price steady over the summer, Callen added.

“Monthly trends, you can see they stayed pretty steady with 2018 starting well, and then into 2019 not much change,” he said. But weather caused quality issues coming out of 2019. Even that lower quality feeder hay found a home with ranchers who had to take cows off of their range early because of drought. It was a situation, Callen said, where even beef cattle ranchers were buying premium hay to feed cattle.

 The story of 2019 was really the timing of rain and its effect on getting hay put up. There were two weeks in mid-May 2019, Callen said, when there was a lot of rain and California for the first time in 15 years didn’t have drought. That caused hay stocks to drop to the lowest on record in May 2019, especially in California, Utah and Nevada.

Looking ahead

The Central Valley of California is putting in more and more groves and pulling out of alfalfa acres, Callen said.

“We’re seeing less and less acres in the Central Valley, a lot of it is profitability and water issues,” he said. “They can put in trees and drip irrigation and I don’t see that reversing. So more and more alfalfa acres are coming there to here in Utah and Nevada.” There was also an upsurge in Montana alfalfa acres, he added.

“With wheat prices down, there have been some farmers in Montana putting in alfalfa hay,” Callen said. There’s always been a lot of meadow hay, but this uptick in alfalfa production is something to watch.

Exports

Alfalfa hay exports to China ended up being up 4% at the end of 2019, that light increase wasn’t expected because of an ongoing trade war with China, Callen said. Because by August 2019 exports had dropped down 30% from 2018, but they surged in October and that was what put us over the top.

China is picking up hay from the UAE, and Saudi Arabia as well, he said. Saudi Arabia is a wildcard to consider in the coming months, considering that farmers there have been ordered to shut off the water to conserve it by the government, but some on the ground there have said that the enforcement of that isn’t quite as stringent.

The UAE is up and down, Callen said, but they continue to import lower quality hay for camels, and they look to be steady this year with what they imported last year. Japan, he added, took advantage of the slowdown of exports from the U.S. to China and we sent quite a bit of alfalfa hay that way he added.

Alfalfa U was sponsored by Alforex Seeds, John Deere, and High Plains Journal. To read up on more of the happenings at the three locations, visit www.alfalfau.com, and see the speaker materials from our presenters.

Jennifer M. Latzke can be reached at 620-227-1807 or [email protected].