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Northwest Iowa Dairy Outlooks

A local discussion of current science and issues concerning dairying in northwest iowa

In its August crop production report, USDA provided an early indication of the 2012 expected output for alfalfa hay and other hay. USDA currently forecasts US alfalfa production at 54.9 million ton, 16% lower than a year ago and 20% lower than the five year average. Production of other hay products (excluding alfalfa) is currently projected at 65.4 million ton, slightly below the 65.8 million ton produced last year but some 12% lower than the five year average. Short supplies of alfalfa hay have dramatically impacted prices for this product. The average national price for alfalfa hay in August was quoted at $201/ton but there is significant range in prices depending on quality of product delivered.

Premium quality alfalfa in Texas this week traded 5.00-10.00 per 
ton higher at $275 to 300 per ton, with light to moderate demand. 
Chopped Alfalfa was steady to firm.  Coastal and Wheat hay remained 
steady to firm.  Trade and demand was light to moderate. Scattered 
rain showers over parts of the state have helped the possibility of
 a third cutting of Coastal Bermuda hay. Hay producers in the 
Southeastern and Eastern parts of the state have an ample supply 
of Coastal Bermuda on hand. The national average price for other hay 
was quoted in August at $140/ton, slightly below the all time high 
of $146 established in May.

The lack of feed availability and the sharp increase in the price of other feed alternatives will tend to pressure cow-calf producers and dairy producers going into the winter months.

While US beef cow slaughter has been lower than some expected in July and August, we could see more cows come to market going into the fall. Seasonally this is to be expected and the fall cow run continues until late November. The short feed availability will likely further exacerbate the situation. So far we have seen a notable increase in the number of dairy cows coming to market. With both corn and alfalfa prices at record levels, producers have had to cull swiftly. Also, keep in mind that while the US beef cow inventory is down some 8% from 2007, the inventory of dairy cows is almost 1% higher than it was five years ago. The ratio of hay fed per dairy cow is dramatically smaller than it is for beef cows. Between July 1 and mid-August, US dairy cow slaughter (based on weekly numbers) is estimated at 395,290 head, 12% higher than the previous year. Beef cow slaughter during the same period was 445,069 head, 15% smaller than the previous year.

Overall US cow slaughter was 840,359 head, 4% smaller than last year.. The liquidation in the dairy industry is likely not over considering the significant mismatch between current milk prices, cattle inventories and feed availability. Beef cow producers also will face some difficult decisions come fall as probably even higher hay prices will be required to ration available supply.

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