2011 Southeast Hay Convention
Hay Production Economics and Outlook
Dr. Curt Lacy Extension Economist-­‐Livestock Dr. Curt Lacy Extension Economist-­‐Livestock 


Good Quality Bermuda Hay Prices ($/ton), 4x5 Roll
Southeastern Weekly Prices, 2005-2011
Current situation Inputs Outlook for 2011 $120.00
$100.00
$/ton
$80.00
$60.00
$40.00
$20.00
20
11
20
10
20
09
20
08
20
07
20
06
20
05
$-
Good Quality Bermuda Hay Prices
Net Returns Over Fertilizer, Fuel and Machinery 2001-­‐2009 $150.00 $100.00 $50.00 $-­‐ 0
20
0
20
0
20
0
20
9 8 7 6 4 05
20
0
20
1
03
20
Dr. Curt Lacy, Extension EconomistLivestock, clacy@uga.edu
229-386-3512
1 Data Source: USDA-NASS
02
20
$(150.00) Livestock Marketing Information Center
0
20
$(50.00) $(100.00) 2011 Southeast Hay Convention
Hay Production Economics and Outlook
$600.00 100% 90% Percentage of Expenses $/Acre Cost $500.00 $400.00 Machinery $300.00 Fuel Fertilizer $200.00 $100.00 80% 70% 60% Fuel Fertilizer 30% 20% 10% $-­‐ 0% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2001 2002 2003 2004 2005 2006 2007 2008 2009 Input situation and outlook INPUTS PRICES RECEIVED Demand for fertilizers Fuel costs   Equipment costs 


$5.00 $4.00 •
•
•
•
Tightening Supplies
Increasing demand
Political unrest
Steady to higher
prices for 2011 and
2012
Number of hay consuming units.   Economy   Acres of hay $1,000
$900
$800
$700
$/ton
Spot Diesel Price ($/gal), US Gulf Coast June 2006-­‐March 2011 $3.00 $600
$500
$400
$2.00 $300
$1.00 $200
$0.00 1
9
9
7
1
9
9
8
1
9
9
9
2
0
0
0
2
0
0
1
2
0
0
2
2
0
0
3
2
0
0
4
2
0
0
5
2
0
0
6
2
0
0
7
2
0
0
8
2
Fe 00
9
b
2
0
M
ar 10
2
0
1
1
06
/17
/1
4 06
/17
/13
06
/17
/1
2 $100
06
/17
/1
1
06
/17
/1
0 Machinery 50% 40% Spot Diesel Price, US Gulf Coast Nitrogen (AN)
Dr. Curt Lacy, Extension EconomistLivestock, clacy@uga.edu
229-386-3512
2
Phosphorous (DAP)
Potash (Muriate)
2011 Southeast Hay Convention
Hay Production Economics and Outlook
Projected Supply and Demand More corn acres Increasing South American demand   Strength of US dollar   Price of natural gas = Steady to higher fertilizer prices in 2011-­‐2012 

U S HAY STOCKS AND PRODUCTION Crop Year Mil. Tons 120 110 100 90 80 70 60 50 40 December 1 Hay Stocks Alfalfa Hay Production Other Hay Production 2006 2008 2010 Livestock Marketing Information Center
Data Source: USDA-NASS, Compiled & Analysis by LMIC
Livestock Marketing Information Center
Data Source: USDA-NASS, Compiled & Analysis by LMIC
Southeastern US Acres of Other Hay and All Hay 1974-­‐2010 14,000 Acres (thous.) 12,000 10,000 8,000 Other Hay 6,000 All Hay 4,000 2,000 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 0 Dr. Curt Lacy, Extension EconomistLivestock, clacy@uga.edu
229-386-3512
3
2011 Southeast Hay Convention
Hay Production Economics and Outlook
JANUARY 1 “BEEF COW FACTORY’
U.S., Annual
Inventories of Non-­‐Bovine Forage Consuming Livestock in Georgia 2002 vs. 2007 Mil. Head
50
Number of Head 45
Replacement
Heifers
40
Beef Cows
35
83796 100,000 74008 80,000 60,000 40,000 20,000 8952 6735 0 Ewes 30
All Goats Horses & Ponies Mule, Burros & Donkeys 25
1980
1983
1986
1989
1992
1995
1998
2001
2004
2007
2010

Number of Operations Beef Cows and Horses 2002 vs. 2007 Rabbits Llamas Alpacas Mule, Burros & Donkeys All Goats Ewes 4500 4000 3500 3000 2500 2000 1500 1000 500 0 Dairy Farms Number of Operations Dairy Cows and Other Types of Hay Consuming Livestock 2002 vs. 2007 25,000 20,000 15,000 10,000 5,000 0 Beef Cattle 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. Livestock Marketing Information Center
Data Source: USDA-FAS, Compiled & Analysis by LMIC
Dr. Curt Lacy, Extension EconomistLivestock, clacy@uga.edu
229-386-3512
4
Horses & Ponies 2011 Southeast Hay Convention
Hay Production Economics and Outlook
Livestock Marketing Information Center
Livestock Marketing Information Center
Data Source: USDA-FAS, Compiled & Analysis by LMIC
Data Source: USDA-FAS, Compiled & Analysis by LMIC
Stocks May 1
Total Production
Total Supply
Disappearance
Ending Stocks
Season Average Price
U.S. All Hay
20.60
143.80
164.40
146.50
17.90
$131 per ton
$175.00 Southeastern All Hay $155.00 mgmt $135.00 3.52
25.34
28.86
24.88-­‐25.8
3.06-­‐3.98
$125-­‐$135 per ton
Good quality Bermuda Hay
mach $115.00 $/ton Item
estab $95.00 op int $75.00 labor $55.00 rprs $35.00 fuel $15.00 $(5.00) chemicals Expected Optimistic Price Scenario   2011 could be a very interesting one for hay producers. Dr. Curt Lacy Extension Economist-­‐Livestock clacy@uga.edu   Tight supplies and an improving economy will likely increase demand.   However, higher input prices could reduce costs enough to lower profits.   Producers need to start thinking in terms of risk management and not just income minus expenses. Dr. Curt Lacy, Extension EconomistLivestock, clacy@uga.edu
229-386-3512
5
Pessimistic fert