If you follow the alfalfa hay market you know there has been little to crow about for some time. One exception that comes to mind is last year’s higher export numbers, a development that may have kept the market from sinking even lower. It doesn’t take a rocket scientist to figure out that your market is in deep trouble when 75 percent of your customers are struggling to stay afloat. But in recent weeks there seem to be developments that signal that the dairy industry is finally turning the corner. On the other hand, there are concerns, including banks that have bailed out, making it difficult for some dairies to get operating loans.
According to recent comments from people who are in the know, the second half of the year will likely see higher milk prices, with some pundits projecting they will continue to rise and hit $19 per hundred weight this year. That may be wishful thinking, but there are a number of positive developments that have recently surfaced. A big increase in dairy exports is a big boost, while dairy imports were at their lowest level in 13 years. The export surge set a new record for dairy exports.
In his May 14 newsletter hay market analyst Seth Hoyt (www.thehoytreport.com), noted that the March report issued by the USDA’s Foreign Agricultural Service showed a significant jump in U.S. dairy exports compared to a year ago. Nonfat dry milk/skim milk powder exports were at 25,599 tons, up 63 percent; cheese exports were a record 13,433 tons in March, up 70 percent from last year; and butterfat at 4,132 tons was three times higher than March of 2009.
Some members of the dairy industry have been critical of the federal government for its handling of the large inventory of cheese, and the over-supply has affected dairy prices. On the other hand, the Dairy Industry Advisory Committee that U.S. Ag Secretary Tom Vilsack commissioned in January will hopefully hold the key to providing answers for critical issues that need to be addressed. The 17-member committee from California had its first meeting in Washington, D.C. from April 13-15. The group is made up of members from all segments of the dairy industry and fixing price volatility is one of the major priorities that the committee is tackling.
Alfalfa is also experiencing volatility in the form of less acreage. It’s a foregone conclusion that acreage in California will take a steep drop this year, perhaps by as much as 15 percent. Alfalfa acres will likely be below the 900,000 mark when the National Ag Statistics Service releases its forecast at the end of June. The one positive this season is higher water allotments, but a late spring rain in parts of the Central Valley has put a damper on the first cutting. Even then there has been only a slight price increase in high-test hay, another reminder that higher milk prices are needed.