Grass seed market strong heading into 2018
−− Prices for grass seed are expected to remain strong as supply is matching demand.
Dec. 7, 2017
Grass seed farmers are heading into 2018 on a strong footing, as world supply is largely balanced with demand, according to a global seed marketing executive.
“We don’t have to worry about prices dropping dramatically this year or next year,” said Claus Ikjaer, president and CEO of DLF Pickseed.
The market outlook is positive despite the strong U.S. dollar, which generally hinders exports of U.S. products, Ikjaer said. For the same amount of money, foreign buyers can now purchase about 80 pounds of U.S. seed compared to 100 pounds in 2011.
Traditionally, strong grass seed prices would spur more production, but that largely didn’t happen when other commodity prices were healthy and those crops were competing for acreage, he said.
“Production is really not going up as it used to do,” Ikjaer said Dec. 5 during the Oregon Seed Growers League annual conference.
Now that commodity crop prices are weak, grass seed growers can be expected to respond by expanding acreage, he said. However, in Oregon, farmers have increasingly dedicated land to hazelnuts.
It’s estimated that Oregon’s grass seed acreage dropped from 525,000 acres in 2006 to about 375,000 acres in 2010, when prices were suffering due to the housing downturn and financial crisis, he said.
Grass seed production has since recovered to about 400,000 acres in 2017 and will likely remain flat next year, Ikjaer said.
In the U.S., three years of lower grass seed yields have depleted stocks of certain species, leaving dealers struggling to meet demand, he said. “That’s starting to create some issues for us.”
High prices are increasingly driving companies to use seed coatings, Ikjaer said.
Such coatings add weight to seed but they can also improve germination by retaining water and making nutrients readily available.
Annual ryegrass is the most commonly exported species, representing nearly 46 percent of the export market, and China is the top destination for grass seed.
“China is by far the most important market for us at the moment,” Ikjaer said.
While Europe is the second major destination for grass seed, the continent is largely self-sufficient and it’s been importing less seed in recent years, he said.
For example, exports of U.S. annual ryegrass to Europe have dropped more than a third since the 2013-2014 marketing year.
Poland’s production of the species has compensated for the decline, since U.S. prices are too high to fill the demand, Ikjaer said.
Ikjaer urged the U.S. industry to more accurately monitor its grass seed acreage, which would help better project available supplies.
In Denmark and Poland, for example, farmers are required to report acreage to the government, but in the U.S., surveys are voluntary and therefore not as dependable, he said.
“We don’t have reliable data,” Ikjaer said.
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