California Hay Prices May Not Have Peaked
There's still room for upward hay-price movement despite the fact that dairy hay prices have gone through the roof in California this year, says Norman Beach, vice-president of the San Joaquin Valley Hay Growers Association in Tracy, CA.
Supreme- and premium-quality alfalfa hays in the state are currently bringing $315-325/ton delivered to dairies, reports Beach, whose alfalfa hay marketing cooperative represents 50,000 membership acres.
"At this point in the year, you can generally expect hay prices to continue rising. We're at the end of the growing season and everything that was going to be put up has been put up. There's no hay left to be made. And hay inventories everywhere are very, very low," Beach says.
Milk prices will also help determine just how high the price of hay might climb this winter. "The industry is waiting to see what milk prices will do. If they go down, even if there's only one bale of hay left, it really won't matter. If people can't pay for it, they can't pay for it."
Even so, Beach doubts that alfalfa prices will reach the $400/ton mark as some market analysts have been predicting. "I just can't see dairymen paying that kind of money for hay. There's other stuff they can feed in their rations at a cheaper cost."
It's still too early to get a hard and fast read on whether the current high price levels will attract more state acreage to alfalfa next year, he says. "We're still a month or so off from having any kind of preliminary numbers. What I have noticed is that there seem to be a lot more irrigation borders (a sign that a field will be planted to alfalfa) going up this fall than I thought there would be given the price of competing crops."
Dan Putnam wouldn't be surprised to see state alfalfa plantings bump up "modestly but not dramatically" in the year ahead.
"We won't likely see anything like a 10-15% increase," says Putnam, University of California Extension forage specialist. From 920,000 to 940,000 California acres were planted to alfalfa during the 2010-2011 season, compared to historically high levels of 1.1 million acres, he notes.
"Although it's too early to say for sure, we could definitely see a rise on the order of 2-5% in 2012. We've never seen alfalfa prices this high before, even in 2008. Although grower costs are high, hay farmers see possibilities for making a decent return this coming year."
But a lot of crops are competing for the same acreage, Putnam says. "If stand establishment, harvesting and water costs for alfalfa are high, crops like corn, cotton and wheat could look more attractive to growers. Also, growers may not be willing to get going with a four-year-long alfalfa project if alternative annual crop prices remain very attractive."
Growers also will keep watch on the 2012 U.S. Farm Bill debate in the months ahead as they mull over whether to plant alfalfa or other crops, Putnam adds. "Large changes in the provisions for grains and ethanol may have an effect on hay plantings. We could be in for some very interesting times."
To contact Beach, call 209-610-9568 or email firstname.lastname@example.org. Putnam can be reached at 530-752-8982 or email@example.com.
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