Alfalfa hay prices in the western U.S. may come down or “soften” this spring, according to one expert.
But the reason isn’t the most pleasant.
Prices are subject to weakness because the biggest customers for alfalfa hay ― dairy farmers ― are experiencing financial difficulty, especially the ones in California.
In some ways, it’s surprising that hay prices haven’t fallen more, points out Seth Hoyt, editor of The Hoyt Report, a weekly hay market newsletter.
Hay prices have been propped up to some degree by the high price of corn, he told those attending a World Ag Expo seminar on Tuesday.
“Hay was more competitive in dairy cow rations because of the price of corn,” he said.
For instance, in central California last September, there was a $75 per ton price spread between rolled corn and supreme alfalfa hay, with rolled corn being the higher of the two. That spread got down to about $20 per ton in January, but has since gone up to $30 to $34, he said.
Exports have also added strength to the hay price.
The amount of alfalfa hay going to China doubled in 2012 from 2011, he said. And, the trend will continue into 2013.
“(The Chinese) are going to need a lot of hay,” he said. The Chinese government wants to double the country’s milk production in the next five years, he said, and that will require a lot of quality hay.
Regarding what hay prices will do this year, Hoyt offered a short-term outlook.
In April, he predicts that prices for early first-cutting supreme alfalfa hay will be around $240 to $250 per ton (delivered) in central California. Similar hay in other parts of the West will be about $200 to $220 per ton, he added.
“If the milk price gets stronger ― $19, $20 or more ― then ladies and gentlemen, all bets are off (and hay prices could go higher), because we’re not going to have an oversupply of hay,” Hoyt said.