2008 Washington State Hay Situation and Outlook J. Shannon Neibergs 1, William T. W. Woodward 2 and Phil J. Peterson 3 1,3 WSU Extension and 2 Columbia Basin College

Facing Agricultural Producers...Challenges...  “Fight for Food or Fuel”  Structural Change in Supply Response  Globalization  Marketing

Light Crude Oil (CL, NYMEX) Monthly Price Chart

Monthly Buy – Sell and Reinvest Hypothetical $100,000 Investment Light Crude vs WA Alfalfa Hay $ROI %$ Light Crude $5,6305.6% Alfalfa Hay$17, %

Monthly Buy – Sell and Reinvest Hypothetical $100,000 Investment Light Crude vs WA Alfalfa Hay $ROI %$ Light Crude $5,6305.6%$42, % Alfalfa Hay$17, %$21, %

2007 California Drought Increases Forage Demand

WA Acres Harvested All Hay Acres up 20,000 acres +2.6% Alfalfa Acres down 10,000 acres -2.3%

WA Hay Production and Yield All Hay up 173,000 tons +5.6% Alfalfa up 80,000 tons +3.7%

USDA Annual Alfalfa Cash Price Hits Record High in 2007 $138

USDA Annual Average Price Cash versus Deflated Prices Price deflation index, 1982 = 100 $138 $67

2007 PNW Hay Supply Statistics Small Change from 2006 to 2007 All HayAlfalfa Acres acres3,290,0002,030,000 change tons (2006 to 2007) -50,000-20,000 % change (2006 to 2007) -1.5%-1.0% Production tons11,679,0009,116,000 change tons (2006 to 2007) -410,000-6,000 % change (2006 to 2007) -3.4%-0.1%

Dairy Cow Geographical Concentration

Continued Growth in Idaho and California Cow Numbers

2007 Milk Price Reaches Record High

2007 Milk Price – Record High

The Feed Pyramid for Dairy Cows

California is clearly a hay deficit state Idaho’s index has increased from 46 in 2000 to 66 in 2007.

Other Domestic Demand Factors Steady beef cattle and Calves January 1 inventory Horse Numbers - Unknown but Willing to Pay for Quality Hay

Exports

Year to date Pacific Rim Hay Imports From ALL countries YTD total Pacific Rim imports are 99% of Japan small decrease offset by Korea increase 3.USA captures 91% of Korean increase 4.Not shown by graph, but in the data USA exports increase 83,427 metric tons from ’06 to ’07 – a 4% increase

West Coast Forage Exports to Pacific Rim Source: Port of Portland

Exchange Rate Trends Note “strengthening” of the Loonie and relative “weakening” of the Yen

China’s Emerging Alfalfa Demand

China as a Hay Export Destination

2008 Hay Outlook Current Production 7,195 Mil. Gal. Expansion Capacity 6,960 Mil. Gal.

All Hay Stocks and Production Washington end of year stocks are tight – PNW stocks are very tight

Monthly Price Trends for WA Alfalfa Hay Consistent June price spike Continually increasing price trend since 2006 $15 per ton increase in 2006 and $25 per ton in 2007 Average

California is the Price Leader in the Hay Market

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