Lower corn prices in 2014 will likely keep a lid on Western hay prices, predicted Seth Hoyt, hay market analyst and keynote speaker at last week's Western Alfalfa & Forage Symposium in Reno, NV. Supreme alfalfa hay prices, he added, should range from $180 to $200/ton in Idaho, Washington, and parts of Nevada.
"However, another year of drought would be a game changer and could push alfalfa hay prices higher than the above price predictions in some areas. It's a slippery slope without knowing what the water situation is going to be."
First-cutting supreme-quality alfalfa hay in central California will likely trade between $245 to $260/ton f.o.b. stack, depending on irrigation water supplies. With fewer corn and wheat acres expected this coming year, particularly in Utah and Idaho, there will likely be more acres planted to hay, Hoyt said.
The number of pounds of alfalfa fed in Western dairy rations in 2013 decreased, averaging 9-9.4 lbs/cow/day, and will likely stay that way or go lower in 2014. "If you look at the first quarter of 2013, we actually went up in our pounds of alfalfa hay in milk cow rations because of the higher price of rolled corn. That has reversed." The delivered rolled corn price to Tulare-Hanford dairies, from September to December, dropped $75/ton, to $216/ton.
Most dairy producers were losing money until the last few months of 2013, the analyst said. "We're seeing a stronger milk price (an estimated $19/cwt for December overbase milk in California), and the cost of production is going down. Unfortunately, we still lost some dairies in California in 2013 – another 50-60." Since 2001, the number of dairies in the state has declined by 30%.
For hay growers and dealers, Hoyt said, that means fewer dairies to sell to.
Milk cow numbers aren't expected to increase, either. "Milk replacement heifers over 500 lbs in the U.S., on Jan. 1, 2013, were down 2%. In California, they were down 7%. So dairies are not keeping the number of heifers they used to keep because it costs so much to grow them."
California's largest dairy auction in central California is selling roughly 25-30% of its dairy replacement heifers to feedlots for slaughter because of the strong beef feeder-cattle market. "It doesn't appear we are going to have the huge amount of heifers we had a few years ago."
Baled hay exports on the West Coast were up by 5% this year over the 2012 figure, and California's hay exports increased by 19%. An estimated 654,000 metric tons of alfalfa hay will have been delivered to the United Arab Emirates (UAE) from the West Coast in 2013, an increase of 9%.
