by Neil Tietz
Editor, Hay & Forage Grower

Last week’s USDA crop report didn’t do much to bolster the optimism of commercial hay growers hoping for significantly higher alfalfa prices in 2010. After analyzing the report, Matt Diersen, South Dakota State University Extension ag economist, foresees “steady to stronger” prices compared to those of 2009. However, supplies will be tight, so any significant production deterrent, such as a drought or grasshopper invasion, “could put some pretty strong support under the alfalfa side of the equation again,” says Diersen.

In its March 31 Prospective Plantings report, USDA said that growers expect to harvest 60.5 million acres of all types of hay this year, 1% more than in 2009. Production is expected to be mostly stable throughout the country, with few big increases and declines. Acreage increases are anticipated throughout most of the Southern Great Plains, Southwest and Coastal Plains, with the largest increases forecast for Kansas, Missouri, Ohio, Texas and Wisconsin. The biggest declines are predicted for Montana and Kentucky.

Diersen figures the expected 1% acreage increase is largely grass rather than alfalfa, because new alfalfa seedings were down last year. An earlier USDA report showed that 2.67 million acres of alfalfa were seeded in 2009, compared with 2.7 million in 2008. “With that acre number being up ever so slightly and the alfalfa seeding numbers being down, I don’t think we’re going to see an increase in alfalfa acres,” he says.

Economic recovery in the beef and dairy sectors should bolster demand for alfalfa hay, contributing to the tight supply situation. But heavy stocks of hay carried over from last year likely will impact prices early in the 2010 growing season. The amount of hay stored on farms last Dec. 1 was the highest in five years and, although hay usage may have been heavier than normal this winter, Diersen expects the May 1 hay stocks figure to be up also.

“I think anything under 24 million tons for May 1 stocks would drive prices up a little bit,” he says. “Otherwise, if it comes in with normal disappearance over the winter, you’re going to have some old stocks weighing on this market.”

USDA’s May 1 hay stocks estimate will be in its May 11 Crop Production report.