The commodities market is wild right now in addition to transportation and labor challenges. We know how frustrating the recent increases and volatility in pricing is. Rest assured we are doing everything we can to try to minimize increases. We work very hard to buy the best we can, and contract when possible. There are several weather factors affecting production across the globe and the conflict in Ukraine and Russia will have significant effects as they are both major players in some of the grain markets. Some key things affecting pricing in the market:

  • The demand for US exports of soybeans is high
  • Expected Soybean yields keep getting adjusted downward
  • The demand for soybean oil has increased as sunoil supply from Ukraine has been cutoff
  • Available exports of soybean oil from South America have been reduced
  • Corn stocks are reduced and production expectations are being lowered
  • Winter wheat crops are being significantly impacted by drought in Kansas, Oklahoma & Texas. China is claiming their worst winter wheat crop in history due to heavy rainfall during the planting period last fall.
  • Countries that traditionally export commodities are holding on to supply to protect their food supply and shipments from the Black Sea region have mostly been halted
  • Fuel costs are increasing significantly and most vendors have implemented fuel surcharges

CBOT Wheat Futures - 6 month trend from macrotrends.net

The hay market has some similarities to the commodities market, though it’s not really traded like commodities are. The biggest factors affecting the price of hay are input costs (fertilizer, fuel, seed), weather, and supply & demand.  This year fertilizer prices are significantly higher than they were in 2021 – in some cases, farmers are seeing prices more than double what they saw last year.  This in combination with increased fuel prices will drastically affect the cost to produce hay (grass & alfalfa) in 2022. Drought conditions last year and this winter will reduce hay production in many of the Northern states (UT, CO, ID, MT) which will increase demand for hay from the states that don’t rely as much on rainfall or snowpack like Arizona.  We get all of our 3-string alfalfa out of Arizona so we are, and will continue to be, facing increasing demand for the hay we typically buy.  In addition to more domestic demand for Arizona hay, China continues to be a significant exporter of alfalfa for its dairy cows.  They buy a lot of hay and are willing to pay anything (it seems) so they continue to drive the price up.  We have great relationships with our brokers and growers, who we have been working with for many years, and we work closely with them to make sure we maintain a consistent supply of hay throughout the year.

Please do not hesitate to reach out if you have any questions, or need any help evaluating your feeding program.

One of the fields in AZ growing our alfalfa

Published On: March 16, 2022Categories: General