7-30 IAT Dairy and Hay

 Michael Stolp is V.P. Market Research and Development for Northwest Farm Credit Services is a genius at market analysis in the ag sector and was kind enough to provide us with his 2nd quarter Market Snapshots. Yesterday we talked about spring rain and beef. Today he talks to us about dairy and hay. 

“Dairy -- Northwest dairy producers’ profit margins should improve in the second half of the year. Corn and soybean prices have remained high, but the expectation of a large corn crop in 2013 may drive feed grain prices lower. Hay prices will likely be pressured by lower corn prices, but a shortage of high quality hay should limit the extent of price declines. Milk prices are projected to remain firm, between $17 and $18 per cwt, supported by strong exports and limited increases in U.S. milk production. Prices at these levels provide profits for more efficient dairies and break-even financial results for the majority.

Hay -- Northwest hay prices may increase in 2013 due to tight supplies, but the market outlook is uncertain. Old crop hay stocks were at near record lows ahead of first cutting, with high-quality alfalfa in particularly short supply. Given early season production challenges and limited acreage increases, this situation is likely to continue. First cutting alfalfa was challenging in the Northwest with untimely and frequent rains. Crop damage was widespread across the region. Limited hay supplies are expected to establish a solid price floor in the hay market. However, tepid demand from Northwest exporters and marginal dairy industry profitability may limit hay price increases.”