Drought has worsened this summer in the Central Corn Belt and South into the concentrated cow-calf production areas of Missouri, Northwestern Arkansas, Southeastern Oklahoma, and Northeast through Central Texas. Although conditions in the western Northern Great Plains, NorthernRockyMountain, and Pacific Northwest have improved over the very poor conditions of the past few years, the area remains dry with low irrigation reservoirs. National pasture and range conditions in mid-August were below year-earlier levels. Although much of this year’s grass hay crop is already in the barn, harvested earlier when forage conditions were much improved, rising prices suggest the cattle sector is already concerned about fall and winter grazing prospects.
This year’s hay crop was estimated at 149.9 million tons, down 5 percent from both last year and 2 years earlier. Grass hay production was down nearly 8 percent from a year ago and down over 6 percent from 2003, while alfalfa hay production was down 2 percent from a year ago and down 3 percent from 2003. Dry weather in July through mid-August is keeping hay supplies in tight hands as some additional hay stocks are built up. Hay stocks on May 1, at the end of the 2004/05 hay season, were up nearly 7 percent from a year earlier and up 26 percent from 2003. However, hay is already being supplemented in some of the dryer areas, particularly until calves are weaned. Although hay prices declined seasonally from June to July, the farm price of hay remains well above a year earlier. The farm price of all hay in July averaged $99.70 a ton, up $9.30 a ton from last year. Alfalfa hay prices were up $10.60 a ton, with other hay up $5 a ton. Improved moisture conditions and accumulated pasture growth will be essential in many areas to keep herd expansion plans on track.
Corn and soybean production and costs remain relatively favorable for the livestock sector. However, continued dryness in August remains a concern for final production estimates as the crops fill. With the exception of Michigan, forecast yields were lower in all of the Corn Belt States as warm, dry weather throughout the growing season depleted soil moisture levels and stressed the crop. The August Crop Production report forecasts corn production at 10.3 billion bushels, down 12 percent from last year’s record 11.81-billion-bushel harvest, but 3 percent above the 2003 harvest. The August harvest forecast would still be the second highest on record. Corn prices in 2005/06 are expected to average $1.80 to $2.20 a bushel, somewhat down from $2.07 for 2004/05. Soybean meal prices are expected to average $175 to $205 per short ton in 2005/06, up modestly from $187 in 2004/05, but well below 2003/04’s $256 average.