Winter precipitation, corn, and milk prices will be the major drivers behind the steering wheel of the Western alfalfa and forage truck in 2014.

In California, the supply of water for irrigation will remain the top driver’s seat issue.

“Everything I share with you about the price outlook for alfalfa hay can be thrown out the window if we have another dry year,” said Seth Hoyt, veteran Western hay market analyst.

Hoyt, author of The Hoyt Report weekly newsletter, delivered his 2014 market projections to about 600 alfalfa and forage enthusiasts during the Western Alfalfa and Forage Symposium held in Reno, Nev., in December.

An early winter forecast developed for the California Department of Water Resources painted a third consecutive moisture-short winter on top of already limited water supplies.

“It’s a slippery slope without knowing what the water situation will be. It’s a real crap shoot,” said Hoyt. “If we don’t receive enough water then all bets are off.”

In 2014, Hoyt believes Central California-grown supreme alfalfa hay could fetch $245-$260 per ton fob stack, depending on the irrigation water situation and due to fewer alfalfa plantings tied to potential water shortages.

Get the  latest agricultural news each day to your Inbox. Click here for the free Western Farm Press Daily e-mail newsletter.

Due to a low corn market, Hoyt expects supreme alfalfa hay prices in the $180-$200 per range in Idaho, Washington, and parts of Nevada. Prices could push into the low $200’s in some areas outside of California on higher test alfalfa hay.

“It’s a slippery slope without knowing what the water situation will be and a tough one to call,” said Hoyt. “If we don’t receive enough moisture then all bets are off.”

With tight supplies of higher quality alfalfa hay and pent-up demand, Hoyt believes Central California dairy hay buyers will show strong demand for first cutting Supreme quality alfalfa hay from the southern California and Arizona deserts in March 2014.”

He predicts the price for first cutting supreme alfalfa hay in the Imperial Valley this next spring could be $215-$230 fob stack; the same or slightly higher than the Spring 2013 price of $215-$220 stack.

“This is contingent on dairies remaining profitable,” Hoyt explained.

“If milk prices fall and dairies go into a negative financial position then that will change the demand from dairies. I think the market could ease on the second and third cutting of alfalfa hay in the Imperial Valley, but how much really depends on irrigation water supplies in the Central Valley.”

If drought conditions persist in Central California with no increase in spring-planted alfalfa hay, top alfalfa hay prices might not slip much for southern desert spring hay, particularly if dairies are profitable.