What is in this article?:
- Western alfalfa prices could dip this spring
- Saudi Arabia is the country to watch
- New crop western-grown premium alfalfa hay this spring could fetch slightly lower income if unprofitable milk prices continue to impede dairy industry profitability, says market analyst Seth Hoyt of The Hoyt Report.
- If the milk price is not profitable, Hoyt says first cutting Imperial County, Calif. hay could fall below the $240-$250 FOB price per ton level received last year.
- Exports of western alfalfa and grass hays are expected to grow significantly this year.
- Hoyts predicts 50 percent of California alfalfa acreage could be Roundup Ready alfalfa this year, compared to 40 percent across the West.
Saudi Arabia is the country to watch
Hoyt expects China will continue as the top importer of Western-grown alfalfa due to its expanding dairy industry. While the growth of the China economy is slowing, the country’s dairy industry is rapidly expanding.
Last year, Western alfalfa hay exports to China were twice the amount exported in 2011. This year, Hoyt believes China could again double its Western alfalfa purchases.
“China will a big player in the Western alfalfa hay market in 2013,” Hoyt said.
China is now growing alfalfa hay in South Africa and South America. So far, production failed to meet China’s demand for alfalfa hay.
Another strong importer of U.S. alfalfa hay is the United Arab Emirates (UAE) which last year purchased about 525,000 tons of Western alfalfa hay.
Japan reduced its alfalfa hay purchases last year by about 5 percent. Not much growth is expected this year. Yet, Japan was strong in the market for grass hays last year. The country purchased 42 percent more western U.S.-grown Timothy hay and 9 percent more Sudan hay.
“Timothy hay is a hot item in Japan,” Hoyt said.
Why the interest in more grass hay? The tsunami which hit Japan in March 2011 caused radiation concerns in Japanese hay production. The government now subsidizes grass hay imports.
Hoyt says new overseas customers for Western alfalfa hay include Vietnam, India, and Saudi Arabia.
“Saudi Arabia is the country to watch,” Hoyt said. “They have large dairies and need a lot of alfalfa hay. Alamarai, the largest dairy company in Saudi Arabia, has purchased a 30,000-acre farm in Argentina which will reduce the amount of alfalfa hay they will need to import from the U.S.”
Last year, California ports surpassed those in the Pacific Northwest as the largest shipper of hay from Western ports. Freight rates out of Long Beach and Oakland were cheaper than those in the Pacific Northwest. Hoyt expects this will continue this year.
For retail market hay, Hoyt believes the demand and price for grass hays will remain strong this year.
Hoyt’s prediction for 2013 California alfalfa hay acreage is slightly lower acreage than the 950,000 acres last year. Acreage will increase about 12,000 acres in the Palo Verde Valley (Blythe area) due to reduced water needs for urban delivery contracts.
Acreage in the Imperial Valley desert should remain unchanged this year. Acreage could decrease about 5 percent in the San Joaquin and Sacramento valleys, and in the North Mountain region.
Alfalfa hay acres in Arizona will likely increase slightly this year due to growers converting cotton acres to alfalfa hay production. About 250,000 acres of Arizona farm ground were planted in alfalfa last year.
Hoyt concluded his presentation with his take on Roundup Ready alfalfa. He believes about 50 percent of California alfalfa acreage could be planted in Roundup Ready alfalfa this year, up from last year.
For the Western states, Hoyt believes Roundup Ready alfalfa could be in the ground on about 40 percent of the acreage this year.