Exports from West Coast up in 2015 — down to Japan

Exports from West Coast up in 2015 — down to Japan

According to the U.S. Department of Commerce, baled hay and straw exports from the West Coast from July through November 2015 were 3,582,640 short tons, up 7 percent from the same period in 2014. The main reason for the increase was a 31 percent increase in alfalfa hay exports to China and stronger alfalfa hay exports to the United Arab Emirates and Saudi Arabia. Hay and straw exports from the West Coast to Japan were down 3 percent in 2015 compared to 2014, according to Japanese Port data. The work slowdown at West Coast ports early last year had a big impact on shipments, as Japanese buyers were forced to purchase hay in other parts of the world. These supplies, along with heavier shipments to Japan when the West Coast labor issues were resolved, resulted in an oversupply situation that reduced West Coast hay shipments to Japan in late spring and summer.

Saudis buy more U.S. alfalfa farmland

Saudis buy more U.S. alfalfa farmland

In an apparent effort to save their own water, Saudi Arabia is buying farmland in the Southwest to grow alfalfa and ship it back to their country’s dairies. According to the CNBC report, the Saudis recently purchased 1,790 acres of farmland in Blythe, Calif., for nearly $32 million. Blythe is in an agricultural area that borders the Colorado River.

The Blythe-area purchase is not the first. A couple of years ago, 10,000 acres of farmland in Vicksburg, Ariz., were purchased by Almarai, a large Saudi food company. Again, alfalfa was the end game.

The Saudi purchases are in areas where water restrictions are comparatively low. In Vicksburg, there are virtually no regulations on groundwater use, according to the CNBC report. Likewise, in Blythe, the Colorado River provides ample “first rights” water resources.

As one might imagine, this trend is rubbing some people in the area the wrong way. Drought and water issues have plagued the region for several years. Some officials feel this business model is analogous to exporting an already limited supply of water. A public meeting was held last week to hear the concerns of residents.

Saudi-purchased land or not, a lot of alfalfa production in the region is grown for export to other countries. Apparently, the Saudis feel the safe play is to control the entire production system, ensuring a consistent supply of feed to their dairies.

December hay prices hold steady

December hay prices hold steady

In last week’s USDA Agricultural Prices report, December hay prices held about as firm as firm can get. The all-hay price held steady from November at $142 per ton while alfalfa hay did the same at $150 per ton (see table below). Hay other than alfalfa increased slightly from $127 to $129 per ton (data not shown).

The USDA price averages account for all qualities of hay sold and the final U.S. estimate is a volume-weighted average. In other words, it’s not a simple average of states. Those states with the most volume sales will impact the final U.S. dollar value more than those states with fewer sales.

The December alfalfa price is $30 per ton lower than one year ago. The largest month-to-month price movement among states included Michigan (minus $40), New York (plus $25), Pennsylvania (minus $22), Oregon (minus $20) and Oklahoma (plus $18).

 

Barley bouncing back

Barley growers in North Dakota, the nation’s leading producer, fared generally well in 2015, benfitting from good yields and relatively attractive prices. (Kiplaar, iStockphoto.com)

Barley bouncing back

By Jonathan Knutson / Agweek Staff Writer on Jan 28, 2016 at 10:31 a.m.
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It’s too early for barley growers in northeast North Dakota and northwest Minnesota to declare victory. But the crop, which had fallen on hard times in the area, is bouncing back — welcome news for both farmers and beer-drinkers.

“There are some good things happening, but we still need a price where raising barley makes sense for us,” says Brian Lacey, a Wendell, Minn., farmer who’s active in his state Barley Growers Association.

Though North Dakota remains the nation’s leading barley producer, the crop’s popularity has suffered in northeast North Dakota and northwest Minnesota as competing crops, including corn and soybeans, gained ground. The area’s long wet cycle, which makes barley riskier to grow, contributed to barley’s decline. Area farmers complained that barley prices were too low to warrant growing the crop.

One example of the barley acreage decline: Grand Forks County farmers planted 10,500 acres of it in 2014, down from 105,000 acres in 1995 and 160,400 acres in 1985. For every 15 acres of barley grown in the country in 1985, only one acre was raised in 2014.

But relatively attractive barley prices caused area farmers to plant more of the crop in 2015. Grand Forks County farmers planted 19,100 acres, nearly double their 2014 barley acres.

Area farmers who planted barley last year generally were rewarded with good yields and good quality, in addition to the favorable prices.

“Barley (growers) in the area needed a year like that,” says Doyle Lentz, a Rolla, N.D., farmer and president of his state Barley Council.

It doesn’t appear that 2016 will be quite as positive. Though final numbers are still being determined, the price that farmers get for their barley will be less — perhaps 50 to 75 cents per bushel less — than what they received for their 2015 crop, he says.

He also says buyers won’t want as much barley as they did a year ago, which reflects the big 2015 crop that boosted supplies.

Still, 2016 barley prices should be strong enough to draw attention from area farmers, Lentz says.

Barley primer

Barley can be sold as either malt or feed. Malt barley is used primarily for beer, while feed barley is fed to animals. Many factors, including protein levels, determine whether barley is sold as malt or feed. Malt usually, though not always, fetches a higher price. Selling barley at the higher malt price gives farmers a better chance of being profitable, but doesn’t guarantee it.

Barley generally is sold under contract, which means farmers sell a specified amount at a specified price, well in advance of harvest. The price and amount fluctuate from year to year.

Positive developments

Several factors bode well for barley growers, both nationally and in northwest Minnesota and northeast North Dakota. They include:

  • The number of young male Americans with jobs, the leading consumers of beer, is finally growing again, says Michael Uhrich, chief economist with the Washington, D.C.-based Beer Institute. The national trade association represents more than 3,300 brewers, both large and small. Uhrich, also an avid craft brewer, notes that while beer can be made from many grains, barley works particularly well.
  • Poor prices for corn and soybeans continue to encourage farmers to reconsider barley. According to North Dakota State University Extension Service 2016 projections, farmers in northeast North Dakota will lose an estimated $12.91 per acre growing barley, once costs and labor are factored in — hardly good, but better than the estimated loss of $18.85 per acre from raising soybeans.
  • Beer and malt companies are investing more money in their facilities. For instance, Rahr Malting Co. is spending $68 million on a building project in Shakopee, Minn., that will make its operation there the world’s largest single-site malting facility.
  • Industry giant Anheuser-Busch now offers a “SmartBarley” program that gives growers a better idea of how well they’re selecting barley varieties for their climate and soil. It also can help them learn if they can improve their production practices.
  • The malting barley endorsement, or MBE, is available this year. The crop insurance product allows malting barley to be insured as malting barley, providing additional protection for farmers who grow it.

But Lentz and other area farmers stress they’ll grow barley only when it can compete financially with other crops.

“We need a competitive price,” Lentz says. “That’s the bottom line.”