By Neil Tietz, Editor, Hay & Forage Grower

A smaller-than-expected 2009 hay crop is one of several factors that will put upward pressure on alfalfa prices this winter and perhaps throughout the year, predicts Matt Diersen, South Dakota State University ag economist.

In its January Crop Production report, USDA estimated 2009 alfalfa production at 71 million tons. That number was a million tons lower than USDA’s previous estimate made in October. Production of other hay, estimated at 80.8 million tons in October, was revised to 76.4 million tons in January.

“There’s less hay to go around than we thought,” says Diersen.

USDA’s Dec. 1 hay stocks estimate – 107 million tons – was the highest in five years. “But it’s not a burdensome level by any means, and most of it is concentrated in just a few states,” he says. States with significantly higher Dec. 1 stocks compared with year-earlier amounts include the Dakotas, Kentucky, Missouri, Idaho, Oregon and Wyoming.

A January cold spell that probably increased hay usage in the North, recovering milk prices and the relative cost of hay and competitive dairy ration ingredients are additional factors pointing to higher alfalfa prices in coming months. Hay prices have dropped dramatically from their 2008 peaks, but corn and soybean meal are still fairly expensive. Despite lower prices, alfalfa hay supplies are tight, and Diersen expects them to stay that way. Returns from growing corn and soybeans continue to look good, and alfalfa seedings were down slightly last year, so alfalfa production isn’t likely to increase much.

“I don’t think the overall hay price is going to go up, but I think the alfalfa price will be better in 2010,” he says.