Editor's note: The following article also appears in the January 2016 issue of Dairy Herd Management.
It's a crisp morning in Utah and Dustin Cox is on the phone trying to get somehay. ‚Ä®The milk cow quality hay he's selling will ship to California for a price similar to what it sold for in 2009 - an indication there's more supply than demand.
In the past year, the spread between dairy quality hay (relative feed value (RFV) of 150 or better) and lower quality hay was the largest it has ever been. The divide: Almost a $100 difference, according to the University of Wisconsin.
Seth Hoyt, who's been monitoring the movement of alfalfa for decades and who authors The Hoyt Report from his office in Ione, Calif., said that's likely to continue into 2016. "The spread will probably stay really wide between the top and bottom of the market," he said. "There's a lot of lower quality hay out there right now."
According to Dan Undersander, a forage specialist at the University of Wisconsin, there was a huge amount of alfalfa ‚Ä®production in the Midwest this past sea‚Ä®son. But a lot of that hay didn't turn out‚Ä®to be dairy quality because of rain damage and mold.
"Everything east of Wisconsin to the Atlantic Ocean had a terrible time getting put up," he said.
Overall hay carryover into 2016 will be up, but the majority of it is middle to lower quality, Hoyt said. Demand is harder to get a handle on, because a lot of dairies in the West have big inventories; some might not purchase a lot of hay the first half of next year.
"When the dairies were making money in 2014, they bought extra hay," he said, "altering the normal demand and marketing pattern in 2015."
Paired with the fact most dairies in the western states have cut back the amount of alfalfa they are feeding their milking cows, Hoyt isn't willing to speculate where hay prices will go in 2016.
"The amount of alfalfa hay being fed to milk cows is a lot less than a few years ago," he said. "Which is why it's hard to figure out demand."
In the Midwest, there's going to be a continued demand for dairy quality hay, possibly enough demand to drive the price - and even to the point of causing a shortage.
"Stocks will be tight this winter," Undersander said.
Supply is limited in the Midwest and Northeast, evi- denced by the steady climb in price since earlier this summer. According to the University of Wisconsin, the average price of alfalfa hay with a RFV of 150 or greater jumped 25% this fall, and is currently $239 per one ton square bale. In June, it was $178. While the prices climbed in the middle of the country, out West alfalfa hay prices have softened - great for dairy producers, but not good for alfalfa farmers. Combined with the ongoing battle with the drought in many areas, that could impact 2016 production.‚Ä®"There's no doubt that 2015 was a rough year for hay growers in the West," Hoyt said. "Anywhere they have an option to plant something else, they will reduce alfalfa hay acres."
For his part, Dustin Cox doesn't think hay prices will increase all that much this year. While neither Hoyt nor Undersander were willing to put a number to the price of high quality alfalfa hay in 2016, they agree the supply and demand situation will right itself in the future.