10-15 IAT Dairy and Hay

Northwest Farm Credit Services VP - Market Research and Development, Michael Stolp gives his quarterly snapshot of dairy and hay. Dairy producers face break-even financial results and a mixed outlook for 2014. Dairy prices are expected to remain relatively stable through yearend, supported by domestic sales and exports. Additionally, dairy producers' profit margins may be bolstered by lower feed costs. Corn prices are significantly lower given record production, and may continue to decline. However, hay prices are likely near a price floor, supported by limited supplies. Looking ahead, milk prices are forecast to decline in 2014, pressured by rising domestic and world production. Break-even or improved financial performance in the coming year requires continued improvements in dairy product demand or feed prices falling in step with milk prices.

 

Northwest hay prices are strong, but market movement has been limited in 2013. Crop damage was widespread across the region, which is perpetuating a longstanding shortage of quality hay. Limited supplies will continue to pressure prices of high quality alfalfa upward, but weaker demand from Northwest hay exporters and marginal dairy industry profitability continue to keep markets in check. Most Northwest hay growers will be profitable in 2013. Producers that were significantly impacted by rain or drought are likely to lose money unless they were protected by crop insurance.