California and Western states alfalfa acreage is expected to increase for the 2001 marketing year. However, the lowest hay stocks in three years, a rapidly growing Western dairy industry, dry pastures and wildfires last summer that depleted supplies and strong hay exports should bolster hay prices this season over last year, according to Seth Hoyt, senior agricultural economist for the California Agricultural Statistics Service.
Hoyt told more than 600 people at the combined 29th annual National Alfalfa Symposium and 30th California Alfalfa Symposium in Las Vegas in December that he "would not be surprised" to see hay prices average $5 to $10 per ton higher than 2000, despite the anticipated acreage increase.
During the next six months, he expects Western alfalfa prices to reach levels not seen since 1997-98. The second half of the year may be just as strong, depending on the final hay acreage planted this fall and summer and the price of corn.
The increase in California alfalfa hay acreage, however, should not be as large as he had anticipated earlier.
Hoyt surmised then that 70,000 to 80,000 acres once planted to sugar beets and processing tomatoes in Central and Northern California would go mostly to alfalfa. "However, it now appears that not as much will be planted to alfalfa," he said. A considerable amount is likely to go to cotton because of a favorable government support program. Plus, cotton uses less water than alfalfa, and water availability continues to be a major concern for producers.
Also, Northern California farmers are planting more Sudangrass instead of alfalfa due to strong export demand. Industry sources, said Hoyt, estimate that as much as 35,000 acres of Sudangrass will be planted in the Sacramento Valley this year, up from 8,000 in 1998.
At the other end of the state in Imperial Valley where alfalfa is the dominant crop, Bermuda hay acreage increased last year from 10,000 to 41,000 acres while Sudangrass decreased by 10,000 acres. Durum wheat acreage also was expected to increase on the strength of stronger fall contract prices for the pasta wheat. Overall, alfalfa hay acreage could be down in the Southern California desert valley.
Hoyt's promising outlook for 2001 is underpinned by a late 2000 hay price rally. The growing dairy industry in California and Idaho is the main reason for that. Some 60,000 cows were added to California herd numbers last year and 30,000 in Idaho. Milk replacement heifers in both states were also at high levels.
"California's milk replacement heifers numbered 720,000 on Jan. 1, 2000, 43 percent above 1991," said Hoyt. "Demand was good for most of the year for high quality milk cow hay." Supplies of supreme quality alfalfa hay became short last fall, and California buyers began searching throughout the West.
Lowest hay stocks Dec. 1, 2000 hay stocks in the seven western states could each the lowest level since 1994 when all the figures are compiled, predicted Hoyt.
Hay shipments into California from other Western states declined last year for the first time in three years. About 725,000 tons were imported in 2000. High fuel costs for trucking and hay not meeting California test requirements for milk cow quality hay are two factors for the decline.
Also, Utah hay is now finding its way into the growing Idaho hay market rather than California, said Hoyt. For the first half of 2000, Utah shipped 16 percent less hay to California than the year before. Arizona, Oregon and Idaho also shipped considerably less alfalfa hay to California, selling it instead to dairies and beef cattle operations at home.
Sales of fair grade alfalfa for beef cattle increased last year and prices followed, pushing up the hay market from the bottom. This market was driven by dry summer pasture, and wildfires in the West taking out rangeland.
This strong demand for feeder hay by beef cattle operators dropped burdensome feeder hay supplies to the lowest level since 1997 and in some areas the lowest since 1994, said Hoyt.
Overall, Hoyt said the western alfalfa hay market could "possibly sustain some increase in acreage for 2001 without significant downside price pressure," said Hoyt. "Demand should be strong for high test, milk cow quality alfalfa hay throughout 2001.
"If export and retail/horse demand for alfalfa hay or alfalfa mixtures is strong in 2001, this will further brighten the price outlook for western states' alfalfa hay industry."