Hay Price Forecasts at the State Level

Higher prices for major crops (e.g., corn, soybeans and wheat) have received considerable attention by analysts, researchers, and producers. A common perception is that acres can be readily bid away from other crops to quickly return to equilibrium price levels. Seldom mentioned are crops that do not trade on a national platform. Principal among these crops probably would be hay from alfalfa and grass. A balance sheet model is developed at the state level for South Dakota. As a state with typically large carryover stocks of hay and multiple markets served, South Dakota presents a stark contrast to states with more stable production, supply, and use. Several structural relations and equations are presented to forecast acres, supply, and price through an inverse demand function. A discussion follows on how to update the price forecast as additional information is obtained. Suggestions are also offered on extending the model to other states.