Utah Ag Bankers Conference Alfalfa and Dairy Outlook Dillon M Feuz Utah State University Extension Feb 2018
Hay Market Most data provided by USDA- AMS, NASS & FAS
1990 1990 1991 1991 1992 1992 1993 1994 1994 1995 1995 1996 1997 1997 1998 1998 1999 1999 2000 2001 2001 2002 2002 2003 2004 2004 2005 2005 2006 2006 2007 2008 2008 2009 2009 2010 2011 2011 2012 2012 2013 2013 2014 2015 2015 2016 2016 2017 Utah Price vs National Price 250 200 150 100 50 0 Utah Price National Price
Annual Utah Alfalfa Hay Price Model (1990-2016) Supply 7 State May Hay Stocks National Corn Price Demand Exports of Alfalfa National Milk Price National Feeder Cattle Price
Change in Utah Alfalfa Hay Price Explained by change in Each Variable Variable Change $/Ton Alfalfa 7 State May Stocks 100,000 ton increase -$1.22 National Corn Price $1/bushel increase +$11.33 Alfalfa Hay Exports 100,000 ton increase +$1.57 National Milk Price $1/cwt. increase +$1.46 National Feeder Cattle Price $1/cwt. increase +$0.41 This model accounted for 93% of the variability in annual Utah Alfalfa Hay Prices in 1990-2016
Using Model to Explain 2016 versus 2015 Alfalfa Hay Prices 2015 average Price $166 2016 average Price $140 A decrease of $26 Hay stocks were up 245,000 7 states -$2.99 Corn Price decreased from 3.71 to 3.49 -$2.49 Exports increased by 300,000 $4.71 Milk Price decreased from 17.10 to 16.01 -$1.59 Feeders decreased from 206.00 to144.43 -$25.24 Total predicted decrease in Utah Alfalfa -$27.60
Mil. Tons 120 US ALL HAY STOCKS December 1 110 100 90 80 70 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 Data Source: USDA-NASS, Compiled & Forecasts by LMIC Livestock Marketing Information Center
Mil. Tons 30 US ALL HAY STOCKS May 1 (Beginning of Crop Year) 25 20 15 10 5 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 Data Source: USDA-NASS, Compiled & Forecasts by LMIC Livestock Marketing Information Center
Mar $3.62 May $3.70 Jul $3.77 Sep $3.84 Corn Futures as of early Feb. 2018 Dec 18 $3.93 $8.00-8.25/cwt Dec 19 $4.10 in Utah Dec 20 $4.14 These prices are about a dime higher compared to one year ago futures.
Class III Milk Futures Early Feb 2018 Change from Month $/cwt 2016 January $13.90 -$2.90 February $13.50 -$3.40 April $13.70 -$1.50 June $14.50 -$1.95 August $15.50 -$1.10 October $15.85 -$0.85 December $15.70 +$0.25
Feeder Cattle Futures Jan 2018 Month Price Change from 2017 Jan $144/cwt +$14/cwt Mar $149/cwt +$20/cwt May $150/cwt +$5/cwt Aug $153/cwt +$10/cwt Oct $153/cwt -$1/cwt Nov $152/cwt -$4/cwt
Thous. Metric Tons 3000 U.S. HAY & HAY PRODUCT EXPORTS Annual 2500 2000 1500 1000 500 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Other Hay Alfalfa Hay Alfalfa Cubes Alfalfa Meal & Pellets Poly. (Alfalfa Hay) Data Source: USDA-FAS, Compiled & Analysis by LMIC Livestock Marketing Information Center
$ Per Ton 220 210 200 190 180 170 160 150 140 130 120 110 ALFALFA HAY MONTHLY AVERAGE PRICE Received by Farmers, U.S., Crop Year Based on my annual model May Supplies -1,400k $17.08 Milk Price -$1.65cwt - $2.40 Exports growth 200K $3.14 Corn Price +$0.10 $1.33 Feeder cattle price even $0.00 Expected Price 2018 $19.15 MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR APR Avg. 11/12-15/16 2016/17 2017/18 Data Source: USDA-NASS Livestock Marketing Information Center
1990 1990 1991 1991 1992 1992 1993 1993 1994 1994 1995 1995 1996 1996 1997 1997 1998 1998 1999 1999 2000 2000 2001 2001 2002 2002 2003 2003 2004 2004 2005 2005 2006 2006 2007 2007 2008 2008 2009 2009 2010 2010 2011 2011 2012 2012 2013 2013 2014 2014 7 Western States Prices 300 250 200 150 100 50 0 AZ CA ID NV OR UT WA
DAG & Response Functions Practical Interpretations California is the leading market for alfalfa hay prices in the West All other states quickly respond to California lead Utah looks to Washington for price signals with no lag time THIS DOES NOT MEAN PRICES ARE EQUAL NOR MOVE BY EQUAL AMOUNTS
Summary May Hay Stocks, Corn Price, Exports, Milk Price and Feeder Cattle Price all impact Utah Alfalfa hay prices California is the leading market for Alfalfa hay prices in the West It appears Utah also looks to Washington state for price signals Prices likely $20/ton higher than a year ago
Dairy Market
Thou. Head 9425 DAIRY COW INVENTORY US, Average, Quarterly 9375 9325 9275 9225 9175 9125 JAN-MAR APR-JUN JUL-SEP OCT-DEC Avg. 2012-2016 2017 2018 Data Source: USDA-NASS Livestock Marketing Information Center 02/07/18
Thou. Pounds 24 MILK PRODUCTION PER MILK COW 1989-2014, Annual 22 20 18 16 14 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 Data Source: USDA/NASS Livestock Marketing Information Center 02/07/18
Bil. Pounds 56 MILK PRODUCTION US Total, Quarterly 55 54 53 52 51 50 49 48 JAN-MAR APR-JUN JUL-SEP OCT-DEC Avg. 2012-2016 2017 2018 Data Source: USDA-NASS Livestock Marketing Information Center 02/07/18
$ per lb $1.90 OCEANIA SKIM MILK POWDER Biweekly $1.70 $1.50 $1.30 $1.10 $0.90 $0.70 $0.50 JAN MAR MAY JUL SEP OCT DEC Avg. 2011-2015 2016 2017 Data Source: USDA-AMS Livestock Marketing Information Center 12/19/17
$ per lb $1.80 EUROPE WHOLE MILK POWDER Biweekly $1.60 $1.40 $1.20 $1.00 $0.80 $0.60 JAN MAR MAY JUL SEP OCT DEC Avg. 2011-2015 2016 2017 Data Source: USDA-AMS Livestock Marketing Information Center 12/19/17
Milk Market Dairy Cattle numbers have increased US Milk Production up a little year over year Demand for milk & cheese a little lower Exports A lot of competition EU/World Supply up
Class III Milk Futures Early Feb 2018 Change from Month $/cwt 2016 January $13.90 -$2.90 February $13.50 -$3.40 April $13.70 -$1.50 June $14.50 -$1.95 August $15.50 -$1.10 October $15.85 -$0.85 December $15.70 +$0.25
Summary Milk prices $1-3/cwt lower than 2017 Probably below or near break-even for most producers