The USDA projects an 8 percent increase in California hay acreage to be harvested this year. But market analysts say they’re not sure production will rise that much, due to a variety of factors.
With more hay planted and prospective U.S. corn acreage expected to be its highest in 75 years, market analysts agree that prices for forage and feed crops will likely weaken this year, but not nearly enough to provide significant relief for dairy farmers.
The latest report from the U.S. Department of Agriculture, released March 30, indicated U.S. farmers intend to plant 95.9 million acres of corn this year, up 4 percent from 2011 and the largest corn acreage since 1937. California corn acreage is expected to increase 2 percent from last year — to 640,000.
U.S. farmers are also expected to harvest more hay this year — some 57.3 million acres, a 3 percent increase from 2011, while California farmers say they intend to harvest 1.5 million acres of hay, up 8 percent from last year.
If these projections pan out and farmers have a good growing season, California dairy producers could enjoy lower prices for a variety of feedstuffs in the months to come — certainly for alfalfa hay and corn, the two main feed ingredients dairies use, said Joel Karlin, commodity manager and market analyst for Western Milling in Goshen, Calif.
After two years of adverse growing weather in the Midwest that hurt crop production, Karlin said the longer-term outlook for feed crops "looks fairly favorable." He noted that the Midwest has experienced record warm temperatures this year that have allowed farmers to start planting earlier, which could result in better yields and more acreage being planted.
But he warned that dairies will probably continue to pay very high protein meal prices because the USDA report also indicates a 1 percent drop in the intended plantings this year for soybeans, another major ingredient of a dairy ration.
"Because there's so much corn being planted, it's coming a little bit at the expense of soybeans," Karlin said.
Hay market analyst Seth Hoyt said while he thinks there will be some softening of alfalfa hay prices this year, "they're not going to drop significantly and be at a level like in 2009," when a financial meltdown in the dairy business crimped demand for hay and caused prices to plummet from their 2008 peaks.
After losing money in 2009, hay farmers looked to grow other crops, Hoyt said, noting that California alfalfa hay acreage last year reached its lowest level since 1942 — 880,000. Fewer acres and less carryover from the previous year resulted in tight supplies and record high hay prices — $237 a ton in 2011, compared to $133 a ton in 2010, according to USDA.