On Friday, USDA released their annual June acreage report which outlines how many acres of each crop are intended to be harvested in the fall. While the agency expects hay acres to increase, Dan Undersander of University of Wisconsin Madison’s Forage Team says the move won’t help bring prices back down.
“[Price pressure is] not likely,” he says. “The hay acreage went up as I had predicted due to the low corn and soybean futures (which are not at breakeven).”
Undersander says there are two reason an increase of more than three-quarts of a million alfalfa acres won’t move prices lower in the short term.
1. New stands aren’t productive right away. Alfalfa is slow to establish and will not produce any yield until mid-summer, Undersander reminds farmers. So even though USDA expects 788,000 more alfalfa acres to be harvested this year compared to last year, it won’t necessarily mean overflowing hay barns in 2018.
2. The West continues to struggle. Drought and winter kill in the west are reducing yields, Undersander says. Combine that with a reduction of hay acres in western states that typically produce the highest quality alfalfa and we can expect dairy quality hay prices to remain high. Compared to 2017, California lost 10,000 acres, Arizona 5,000 acres, and Washington 20,000 acres