In its latest quarterly report, Rabobank noted that domestic feed prices continue to find strength. U.S. alfalfa hay prices have continued their seasonal decline but remain well above the five-year average. Meanwhile, byproduct prices offer a competitive option due to recent increases in corn and soybean meal prices.
The U.S. alfalfa price in August was down 1% from the previous month to $172 per ton and down 4% from last August but still was 7% higher than the five-year average for the month of August.
The August average price for supreme and premium alfalfa in the five leading dairy states was $192 per ton, which is down about 8% year over year. Other hay prices held steady at $137 per ton, up 6% from year-over-year levels seen in August and 13% higher than the previous five-year average for August.
Through August 2020, total U.S. alfalfa exports remained 11% higher on the year, the report noted. August exports were not nearly as robust as they were earlier in the season and were 1% lower than the previous five-year average for August.
“China continues to be a bright spot, with U.S. alfalfa exports to South Korea and Taiwan are also stronger [year over year] in 2020,” the Rabobank report noted, adding that exports to Japan, Saudi Arabia and the United Arab Emirates "are lagging last year’s pace so far this year.”
The report also noted that other hay exports have weakened, but prices indicated adequate overall demand, given the available supply. After a strong year-over-year surge during April and May, U.S. other hay exports were considerably weaker over the summer. However, prices for other hay have remained relatively strong. “The strong price suggests that domestic and export demand combined continues to be robust enough under current supply-side conditions,” the report states.
In the dried distillers grains with solubles (DDGS) market, byproduct prices remain higher. As ethanol plants slowly resume production, DDGS availability continues to increase.
DDGS prices have come down from their higher levels in April, but on average for this marketing year, prices have been about 8.7% higher compared to last year’s marketing average, Rabobank said. Wheat middlings prices were 5.5% higher in January to August compared to the same period in 2019.
Recent price increases for corn and soybean meal could also bring more DDGS back to livestock rations, the report said, adding, “Weather and strong exports continue to play a factor in higher corn and soybean meal prices.” While DDGS prices continue to be slightly higher than last year, the recent rally in soybean meal and corn prices is encouraging feed mills to add DDGS back into feed rations as the cost per unit of protein has increased for soybean meal.