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Beef Outlook: Beef producers may see even higher hay and corn costs if USDA planting projections hold.

Scott Brown

April 13, 2022

3 Min Read
cow and calf feeding on hay
COSTLY FORAGE: Farmers should secure hay early this year as supply may be tight because of drought conditions in the West. That coupled with the latest USDA planting intentions report, which shows a trend of acres switching away from hay and into soybean production, may have some cattle producers paying a higher price for winter forage. JackieNix/Getty Images

USDA released the annual Prospective Plantings Report on March 31, and the contents point to challenges for multiple sectors of the cattle industry.

While total area planted showed a slight increase from last year to 317.4 million acres, area devoted to corn production is reported to decline by 3.9 million acres. Hay harvested acres are expected to fall again, reaching their lowest level in more than a century. Soybean acres posted the largest increase from 2021, up 3.8 million acres.

As the report is based primarily off surveys conducted during the first two weeks of March, final area numbers will likely differ from this first snapshot. But it does bring to light some of the issues that could be facing producers up and down the cattle supply chain.

Hay supply struggles

While the decrease in hay acres is not too surprising given the long-term trend, it likely leads to little relief from the record or near-record high hay prices that have been experienced in many areas of the country since the middle of last year.

With drought conditions slow to improve in many areas of the country, cow-calf producers will continue to face an uphill battle to increase what remains a rather scarce hay supply, setting up the potential for a prolonged period of stubbornly high hay prices.

Planting decisions continue to result in less hay acreage chart

Even states with the largest beef cow numbers have seen hay acreage decline substantially in recent years. The expectation for 2022 hay harvested acres in the largest 10 beef cow states comes in 3.7 million acres below its average from 2000-14. States outside the top 10 lost even more acreage, down 6.1 million for this year compared to the 2000-14 average.

Soybeans have taken up most of that previous hay ground, with area up 9.6 million acres in the top 10 beef cow states, and 6.3 million higher in all other states for 2022 relative to 2000-14.

Corn feed costs rise

The report also signifies upward pressure to corn prices, with corn area expected to be at its third-lowest level since 2010. This will directly increase the cost of feeding cattle, with at least some portion of that cost likely attempted to be recouped by lowering bids for feeder cattle.

While there is not much positive news regarding the prospects for corn and hay production in 2022 from this recent acreage report, keep in mind that much can change during the growing season. Markets will have a keen eye on weather conditions and demand factors in the months to come, and it is likely that price breaks for feed inputs may present themselves during portions of the year.

Tighter supplies of beef and cattle are still projected to contribute to relatively strong cattle prices for the next couple of years, although larger feedlot placements and higher beef cow slaughter rates might delay the inevitable decline in beef production, particularly if drought conditions persist or expand.

A continuation of recent strong levels of consumer beef demand would also go a long way in helping the industry through this period of elevated input costs.

Brown is a livestock economist with the University of Missouri. He grew up on a diversified farm in northwest Missouri.

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