Northwest hay growers doubt acreage report’s accuracy

Published: July 8, 2014 11:46AM

Last changed: July 8, 2014 12:44PM

AR-140709884.jpg&MaxW=600Carol Ryan Dumas/Capital Press
Swathing takes a break in this alfalfa field in Jerome Idaho, on Tuesday morning, July 8. Idaho is down 10,000 in hay acres harvested this year, a surprise to some in the industry.

Harvested hay acres dropped slightly this year in the U.S., but some big increases in Washington and Oregon have growers there surprised and doubtful of USDA’s reported numbers.

While U.S. hay acreage has dropped slightly compared to a year ago, increased acreage reported in individual states last week by USDA’s National Agricultural Statistics Service comes as a big surprise to growers.

Nationwide harvested acreage of all hay at 57.6 million acres is down 611,000 acres from

58.3 million acres in 2013. But acreage is up 160,000 in Washington and 30,000 in Oregon, according to the report.

Those increases seem unrealistice, according to growers in Washington and Oregon who represent their state hay associations.

At 920,000 acres, Washington alfalfa acres are up 60,000 acres, and other hay is up 100,000 acres, USDA reported.

“Flaws in the numbers — that’s my first thought,” said Loren Lentz, president of the Washington State Hay Growers Association, who farms north of Spokane.

“I’m going to guess there’s something wrong. I can’t think where it would have gone in,” he said.

More acres did go into Timothy hay due to demand and price, but fall planting of hay acres in the Columbia basin were more likely to have been down because prices were down through fall, he said.

California buyers did come in through winter and spring and cleared out a lot of Washington’s excess of lower quality Timothy and alfalfa and raised prices, so producers could have planted more in the spring. But that crop won’t produce until next year, and it could even take two years to establish well enough to harvest, he said.

He hasn’t seen any big swings in hay acreage in his northeast area.

Lentz said Washington’s first cutting was some of the best hay in quite a while and prices are good. Washington won’t be competing with California this year on export hay due to California’s short water situation, so things are looking good on that front, he said.

At 1.05 million acres in total, Oregon is down 10,000 acres in alfalfa but up 40,000 acres in other hay, USDA reported.

“That’s a big number. It’s a tough one to believe,” said Greg Mohnen, a Bend, Ore., hay grower and vice president of the Oregon Hay and Forage Association.

He’s heard that growers were increasing acreage because of high hay prices, but he doesn’t know where it would have gone in or what producers would have taken out of production to make room for more hay, he said.

If the acreage numbers are correct, that excess hay will be going to California, he said.

California’s total acreage, at 1.4 million acres, is down 70,000 acres. Alfalfa acres are up 30,000, and other hay is down 100,000 acres, USDA reported.

It’s certainly no surprise that acreage is down, said Spencer Halsey, executive director of California Alfalfa and Forage Association.

He doesn’t know if the association’s members agree with the numbers, but the short water supply is being diverted to more permanent crops or highest value crops, he said.

It’s an interesting situation for hay growers in California because hay prices are high. Water is tight, but if they have the water, they can make more money on hay than some other crops, he said.

Idaho’s hay acreage, at 1.5 million, is down 10,000 acres — 40,000 less in alfalfa and up 30,000 in other hay.

Some of that loss could be in lost seeds and stands in small basins due to drought challenges, but those losses shouldn’t be enough to bring acreage down as much as USDA reported, said Glenn Shewmaker, extension forage specialist with the University of Idaho in Twin Falls.

Due to high prices and lower input costs, alfalfa would bring better returns than most other crops. He doesn’t understand the drop in acreage in Idaho or nationwide, he said.

He would have thought more corn acres would have been converted to alfalfa. Inputs for alfalfa are lower than corn and with current prices, growers could net a couple of hundred dollars more per acre than many other crops, he said, adding USDA’s numbers are suspect.

Hay area harvested

Area all hay 2013 all hay 2014

1,000 acres

Calif. 1,440 1,370

Idaho 1,480 1,470

Ore. 1,020 1050

Wash. 760 920

U.S. 58,257 57,646

Source: USDA-NASS

Global dairy price recovery seen six months out

Global dairy price recovery seen six months out

Published: July 3, 2014 9:47AM
Rabobank’s newest dairy report shows the anticipated drops in global dairy commodity prices in the second quarter of 2014 were more sever than anticipated.

Higher global milk production and a reduction in Chinese dairy purchases led to a 10 to 20 percent decline in international dairy commodity prices in the three months leading up to mid-June, according to Rabobank.

In its latest quarterly dairy report, Rabobank said the lower prices were expected as global milk production increased in response to almost 12 months of exceptionally high prices.

But, the bank’s analysts said, the extent of the fall was more severe than anticipated.

The prices of whole milk powder, skim milk powder and butter fell by about 20 percent. Cheese, which never peaked as high as other commodities, fell by 9 percent.

U.S. wholesale prices have slipped considerably less than those in other markets and in many cases were at a significant premium to world prices in mid-June. But they are expected to fall faster than elsewhere through the second half of the year as exports fall back and domestic milk production picks up, the bank estimated.

Global milk production rose at an unprecedented rate in export regions as producers responded to near-record prices, lower feed costs and generally positive weather. The big seven export regions generated a combined 5.5 percent increase in production the first four months of the year — roughly an additional 123 million hundredweight of milk.

Consumption growth in those regions has been modest, with consumers battling disappointing economies and significant price increases in dairy products.

A tipping point in the market balance hit in the second quarter of the year as China suddenly retreated from the market just as the supply wave reached its peak, the bank’s analysts said.

Rabobank expects export supply growth to lose steam as 2014 progresses, with little improvement in prices until late in the year or early 2015. It expects to see a recovery phase in early 2015 as economic growth boosts consumption in export and import regions and China returns to the world market in earnest.

In the U.S., dairy exports increased 20 percent year over year in the first four months of 2014. But with commercial inventories below year-ago levels, the U.S. will be unable to repeat the record stock drawdown of the previous 12 months. Combined with higher pricing in the domestic market, U.S. export volumes will likely fall in the second half of the year, Rabobank analysts said.

Year-to-date milk production in the U.S. in the first five months of the year was up only 1.1. percent, despite exceptional margins. Strong export prices and low feed costs have had producers’ income over feed costs above $10 per hundredweight since October 2013, peaking above a new record $15 per hundredweight in March.

But many farmers have used improved returns to pay down debt, buy more land or buy feed forward rather than invest in expansion. Bitter cold in the Midwest also held back supply, the bank reported.

Rabobank expects U.S. milk production to gain some traction and to be up 3 percent year over year in the second half of 2014 and continue to grow at a clip in the first quarter of 2015.

U.S. demand is also likely to pick up by then, and Rabobank expects the U.S. to resume its trend of building an even larger export footprint.

Value of Washington organic farm crops rising, acreage shrinking | capitalpress.com

KENNEWICK, Wash. (AP) — For the first time, people seek out Gary Middleton to buy his organic fruit.

That’s something that has taken Middleton, who farms about 100 acres of organic apples, cherries and blueberries near Eltopia, about 13 years to accomplish, and is among the reasons he plans to continue to stay organic.

The number of organic acres farmed in the state is dropping, from almost 105,000 in 2009 to an estimated 88,100 in 2012, according to a recent study by Washington State University’s Center for Sustaining Agriculture and Natural Resources.

But the value of the state’s organic crops is rising.

It grew by 20 percent from 2010-11, to $284.5 million, the study said. That’s the highest value in seven years.

Eastern Washington counties accounted for about 82 percent of that value.

Some of the drop in acreage may be because farmers have realized the amount of work, expense and challenge involved with farming organically, said Middleton of Middleton Organic Orchards.

Organic agriculture is more labor-intensive, requiring hand thinning and hand weeding, he explained. At the peak, when blueberries and cherries are harvested simultaneously, he’ll need about 250 people.

Organic prices have to be high enough to cover those increased costs.

“I love being an organic farmer, but it still comes down to economics,” he said.

Organic farmers don’t use herbicides, and are limited in the pesticides and fertilizers they can use.

Middleton uses compost for fertilizer, which requires more planning when it comes to nutrients. It doesn’t deliver as much nitrogen as fast as synthetic products.

But organic agriculture seems a good fit for stewardship of the land, he said. He’s noticed that the beneficial insects, including bees and ladybugs, have increased.

Most of the blueberries still were green last week, although a few showed a hint of a bluish-purple hue.

Middleton’s irrigation system was going on and off in a 15-minute rotation to cool his apples and blueberries and to suppress sunburn.

The blueberry and cherry harvests will likely start around the end of this month, Middleton said. Blueberries will be color-picked by hand, with the same bushes picked three to four times.

Middleton’s goal is to serve an “elite” fresh market, with stores like Costco and Whole Foods carrying his blueberries, he said.

Blueberry harvest can last a month, and cherry harvest can last for about 14 days, he said. His cherries, like others in the area, were hit by frost damage, slashing the expected yield.

After those harvests are complete, Middleton and his crew will move on to the Gala, Golden Delicious and Granny Smith apples. Frost also might affect those yields, but he said the blueberries seemed to come through the cold — which dropped as low as 23 degrees — just fine.

Increasing yields from fruit trees could be a part of why the value of the state’s organic crops continue to grow, said David Granatstein, a sustainable agriculture specialist at WSU’s Center for Sustaining Agriculture and Natural Resources.

Granatstein completed the WSU study with Elizabeth Kirby, a sustainable agriculture research associate.

It’s also possible that some fruit that was sold as conventional because of better prices is now being sold as organic, Granatstein said.

Sales and prices of organic crops continue to increase, suggesting that the market is not saturated, he said.

Grant County continues to lead the state in organic production with about 22,000 acres and a 2011 crop value of $87.8 million, up about 37 percent from the year before.

Benton County has the second most acreage, at about 7,800 in 2012, down about 10 percent from the year before. The 2011 crop value was about $25.8 million, up 17 percent from the previous year.

Franklin County had an estimated 3,200 acres in 2012, a 2 percent drop. Yet value climbed by nearly 37 percent to $18 million.

Organic acres and sales for other area counties were:

* Adams County, relatively unchanged at about 2,500 organic acres in 2012, with value growing by nearly 37 percent to more than $6 million in 2011.

* Walla Walla County, down by 4 percent to about 2,200 acres in 2012, with value up 10 percent to $22 million.

* Yakima County, up 5 percent at about 5,700 acres in 2012, with value increasing 23 percent to $23.4 million in 2011.

Seo

Hay swathers rolling in southern Idaho

Swathers are rolling through southern Idaho’s hay crop, and growers are optimistic about yield and quality, and the sunny weather forecast for the next 10 days.

In Twin Falls County, Clark Kauffman still has some alfalfa to cut but is already baling and stacking small bales headed for the horse market.

Yields are about normal but could be down a bit because he cut early this year, beginning May 26. Quality is good despite a day of rain that caught some of his hay in windrows. But it’s still green and leafy and will make good horse hay, he said.

In addition to a little rain, he’s battled low temperatures that kept setting the crop back and wind that kept it really dry, he said.

The cold spring weather brought frosts, same as last year when he delayed cutting. Last year’s crop kept maturing even though it wasn’t blooming, which resulted in big stems and lower quality. That’s why he cut a little early this year, he said.

That and the fact that demand is strong and prices look good.

“People are calling every day and coming and getting it. There’s not much around, especially small bales,” he said.

Hay is selling for $200 to $220 a ton, he said.

USDA Market News in Moses Lake, Wash., reports average prices for new crop Idaho hay last week were $237 a ton for supreme quality, $200 a ton for both premium and good, and about $192 a ton for fair.

Harvest of first cutting is ahead of the five-year average at 55 percent in south-central Idaho and 59 percent in southwest Idaho, compared with the average 15 percent and 25 percent, respectively, said Vince Matthews, director of the Idaho office of the National Agricultural Statistics Service.

Harvest hasn’t really taken off in southeastern Idaho, with only 4 percent of first cutting harvested, but things are looking good despite the cool spring, said Will Ricks, president of the Idaho Hay and Forage Association and a Monteview grower.

Most producers in the area will start cutting next week, a little earlier than last year. Yield is expected to be down just a bit but quality is expected to be good, he said

In Cassia County, Wayne Hurst started cutting late last week, and overall things are looking pretty good. Tonnage is looking good even with frosts knocking the crop back, but he can’t say anything on quality yet, he said.

Cold weather in April and the first 10 days of May has Jim Blanksma running a week to 10 days late in harvesting his crop in Elmore County. He’s running dawn to dark as hard as he can, he said.

His crop has had some rain damage and frost damage, unusual in his areas, but said overall it should be pretty good hay if he can get it up with no problems. He’s expecting first cutting to yield a little more because he held off cutting it, he said.

There’s no doubt hay north of the Snake River will have some frost damage, said Jerome County Extension Educator Steve Hines.

Nighttime temperatures dropped well below freezing in early May, and there’s a chance yields will be lower due to cooler temperatures in general, he said.

Some earlier cut hay was rained on, but it was likely green chopped and put up pretty quickly. Hay that’s lying in the field now doesn’t seem to have any moisture damage. But winter mustards were pretty prevalent, and that’s likely to affect quality, he said.

Harvested acreage for all hay in Idaho is expected to be down 10,000 acres from last year to 1.33 million acres, according to USDA’s National Agricultural Statistics Service. Nationwide those acres are expected to be up 159,000 acres to 56.5 million acres.

Drought not dampening U.S. milk production

USDA’s April report pegged U.S. milk production at 17.27 billion pounds, up 0.2. percent over a year ago despite a drought that was expected to curb production.

“The drought was supposed to complicate everything and reduce production. It didn’t happen,” said Jerry Dryer, chief market analyst for Rice Dairy, a Chicago brokerage house.

Dairymen seem to keep increasing production, despite drought, tight forage supplies and high feed costs, he said.

“They just keep making more milk,” he said.

Production was down in some western states, but production in the Midwest took up the slack, and production in the West is recovering.

Milk prices have been pretty good, with Class III over $18 per hundredweight and Class IV over $19 per hundredweight. The downside is feed prices are higher than usual, he said.

Good milk prices are likely due to good demand for dairy products. Food service and retail sales have been very good, with food services sale in April posting the best month ever seen, he said.

Exports of dairy products haven’t matched the torrid pace seen earlier but they’re still good and expected to get better. Milk production is down in most of the rest of the world, and while U.S. inventories of dairy products are huge, the EU and Oceana have very little inventory, Dryer said.

That will have international customers coming to the U.S. for product, and exports should be strong in the third quarter, he said.

Right now, however, U.S. inventories are overwhelming. Demand has been good, but such large inventories in the past would have had cheese and butter trading at $1.20 to $1.30 a pound. Cheese is currently trading at about $1.70 a pound, and butter is trading at about $1.50 a pound. And milk prices are above the five-year average, he said.

“We’re operating in a different world,” he said.

Robin Schmahl, commodity broker and owner of AgDairy LLC, Elkhart Lake, Wis., said he expects things to stay sideways and choppy in the cash markets in the near term and doesn’t see anything to spur substantial purchases by end-users.

There’s been pretty good movement in inventories of dairy products but if milk production remains steady and more product is added to inventories, there’ll need to be good demand to support prices, he said.

Even though manufacturers have been steadily shipping overseas, they still have large stocks, and that could mean lower milk prices later in the year. Especially if USDA’s projection of 2 billion bushels of carry-out corn proves true.

High corn stocks could lower corn prices to $4 a bushel. Lower feed costs are not going to curb milk production and would instead lead to lower milk prices, he said.

Class III milk is trading at about $18.50 per hundredweight, which is not a bad price and not likely to move much. If USDA’s May Class III price in federal orders is $18.50, it’ll be the highest Class III price since September of last year.

Class III futures are trading in the $18 range through November, and prices have been in the high $16 to $18.50 range since September. But they could go lower with a good corn crop and building corn stocks, he said.

“It doesn’t seem like the (corn) market is going to be too tight,” he said.

World demand for dairy products has been good, with buyers coming into the market to buy cheese despite a bump up in prices. Powder and whey supplies are tightening, but that’s not going to have a large impact this year, he said.

Overall, he thinks world demand is going to be steady, he said.