What is in this article?:
- Higher early 2011 Western alfalfa hay prices than year ago
- Export outlook
- Respected California market analyst Seth Hoyt predicts higher 2011 California new crop alfalfa hay prices compared to a year earlier.
- Hoyt predicts new crop supreme hay could fetch $200 to $220/ton range delivered to Tulare, California’s top dairy production area.
- Hoyt foresees 3 percent to 5 percent alfalfa acreage reduction in California this year, down to about 900,000 acres statewide.
- Western-state alfalfa acreage reduction of 5 percent to 10 percent is possible.
California hay export prices could edge slightly higher this year which could temper demand.
Japan, the largest importer of Western-grown alfalfa hay, should maintain its top buyer status this year. Japanese imports from the West Coast totaled about 30,000 metric tons last September, according to Japanese port data.
Australia, a competitor for U.S. baled hay exports, increased oaten hay exports to Japan about 5 percent last year. That could be lower this year due to increased rainfall in Australian and a strong Australian dollar.
“These factors will cause Australia to have a harder time competing with us,” Hoyt said. “I don’t see a big upsurge in Australian exports to Japan until perhaps later in 2011.”
Hoyt also predicts increased Western U.S. hay exports this year to the United Arab Emirates (UAE), the third largest U.S. export hay market. The UAE has a small dairy industry but has many goats and camels.
China should also remain a strong buyer of Western hay in 2011 due to its fast-growing dairy industry. The Chinese will press to pay less for U.S. hay, a futile effort since few good buying options exist worldwide.
“China needs Western hay,” Hoyt noted. “China will need to step up and pay more.”
U.S. Commerce Department data reveals West Coast alfalfa hay exports to China totaled more than 16,000 metric tons in September 2010, up significantly from about 2,000 metric tons in January 2009.
Another key market for Western hay is Saudi Arabia for the country’s large dairy industry. U.S. hay exports will likely increase over time since the Saudi government is poised to reduce water use for crop production.
“Saudi Arabia is a country which offers good potential for the U.S. in the future,” Hoyt said.
The hay market analyst predicts strong prices this winter for retail alfalfa hay, but prices may soften slightly when the new crop arrives.
Premium retail hay prices in the Imperial Valley escalated from $125/ton in July 2010 to $160 - $165/ton in December 2010. Prices in the Central and Northern valleys during the same time period swelled from $140/ton to $190/ton.
“Some people think the price could hit $200/ton,” Hoyt said. “There is less retail hay - alfalfa and other hay - in barns now compared to a year ago. There is more hay demand at feed stores.”
While the dairy industry remains in a tight fiscal grip, cash-strapped alfalfa growers will take advantage of short-term cropping options this year including cotton.
Cotton acreage bounced back last year to reclaim its King Cotton throne in the Golden State with 307,000 planted acres of Pima and Acala cotton. Hoyt says anxious growers ready to lock soaring cotton prices could increase acreage 10 percent to 15 percent in 2011 to the 400,000 to 450,000 total acre range, the level previously seen in 2007.