Dairy and Hay Market Snapshots

With fourth quarter’s Market Snapshots for dairy here is Northwest Farm Credit Services Michael Stolp.
Stolp: “Higher milk prices and low feed costs drove increased dairy profitability in the fourth quarter of 2016, which helped offset losses from the first half of the year. Forecasts for higher milk prices, lower production in major exporting countries and low feed costs favor dairies’ margins in 2017. Increasing beef supplies are pressuring cull cow and bull calf prices lower. Day-old bull calves are selling for as low as $10 per head, down from $400 per head in 2014.”
The Dairy Snapshot also states that moving forward into the new year the outlook is favorable for dairy profitability. Futures markets suggest Class III and IV milk prices approaching $18 per cwt in August 2017. Improving milk prices combined with low feed costs should increase producers’ margins.
Stolp continues with the hay market snapshot
Stolp: “Hay markets and grower profitability remain weighed down by strong inventories and challenging export conditions. Supplies of weather-damaged hay overhang feeder markets, while demand for high-quality hay is capped by dairies with hay inventories of 12 months or more. Although alfalfa exports increased in 2016, continued strength in exports is uncertain. The U.S. dollar remains strong and freight prices face pressure upward due to shipping company consolidation.”