A supply-side shortfall has kept upward pressure on alfalfa hay prices in south-central Oregon throughout the late fall-early winter months, reports Scott Pierson of Pierson Hay near Silver Lake.

Currently, top-quality dairy alfalfa hay in the area is selling for $225-275/ton at the stack, while medium-quality alfalfa (160-170 RFV) is fetching $215/ton. “Across the board, prices are roughly $80/ton higher than they were a year ago,” says Pierson, also president of the Oregon Hay and Forage Association. “There are a lot of people looking for alfalfa, but there’s just not a lot of it on the market right now. What hay there is in the barns has already been committed for the dairy, export and beef markets.”

Along with alfalfa and alfalfa-grass hay, Pierson grows triticale, oats and meadow hay on 375 acres. He packages hay in two-tie and three-tie small square bales weighing around 90 lbs and in large squares. Horse owners and feed stores in central and western Oregon are his primary market. He also custom bales and runs a hay trucking business.

What happens to alfalfa prices in the months ahead, Pierson says, will depend mostly on developments in the dairy and hay-export sectors. Milk prices in the Northwest have fallen off a bit in recent months. “You have to wonder how long dairy farmers are going to be willing to pay high prices for hay.”

For exports, he says, a strengthening U.S. dollar is the key factor to watch. “A strong dollar makes hay more expensive for overseas customers, and there’s getting to be more competition from other countries looking to export their hay.”

Prices could dip by $20-25/ton as the new crop comes on; some producers look to sell their first crops quickly out of the field, Pierson says. Long-term, though, acres planted to alfalfa will likely be on the short side in 2012, as they were last year. That will set the stage for continued strong prices later in the growing season. Even so, higher input costs, particularly for fuel and fertilizer, will probably cut into 2012 profit margins compared to 2011 profits, he says.

To contact Pierson, call 541-576-2889 or email piersonhay@presys.com