Western acres planted to alfalfa hay may be down by 5-10%, and silage corn plantings in California alone may be reduced 10-15% next year, estimates Seth Hoyt. Author of The Hoyt Report, a forage market newsletter, Hoyt was lead speaker at the California Alfalfa and Forage Symposium last week.

“Growers are going to be very gun-shy of growing not only corn silage, but hay,” he said to about 425 growers, dairymen and industry representatives in Visalia. In California, Hoyt predicted a drop to 900,000 alfalfa acres and 300,000-350,000 silage corn acres for 2011.

“If the milk price drops down to the $13-13.50/cwt level early in the year, when the cost of production is in the high $13s or $14s or higher, we’re going to have another situation with … tighter money in the dairy industry. And as you know, dairies buy 75-80% of the hay in California and in the West, about 65%.”

Growers will plant some of those acres to cotton, which may see an increase from 307,000 acres in 2010 to 400,000-450,000 next year. Wheat acres will be higher with contract prices from $200 to $240/ton as seen the past month on hard red winter in central California and $240-250 for durum in the Imperial Valley. And the central part of the state will see more acres planted to corn grain.

“There’s a very strong corn market. It’s softened from where it was a few weeks ago, where corn to Tulare, Hanford and Visalia dairies got as high as $256/ton delivered for rolled corn. But growers have contracted corn for next year from $170, $180 and even up to $200/ton.”

Fewer hay acres translate to lower hay production in the West in 2011 – possibly 15-20% less than in 2009, Hoyt figured. At the same time, cow numbers will be up – 24,000 more as of September 2010 in Arizona, California, Idaho, Washington, Oregon and Utah.

“Trying to predict alfalfa hay prices in the West when we are looking at dairies possibly going into a negative cash flow situation is like throwing darts at the board,” Hoyt said.

Californians can expect the first two cuttings of supreme new-crop hay delivered to Tulare to bring $200-220/ton, down from recent delivered prices of $210-230.

“The dairies, if milk prices are below breakeven, will try to buy for less than that. But I believe that the supplies are going to be such that they’re going to have a hard time buying hay as cheap as they would like to in months ahead.”

In the Imperial Valley, supreme hay will go for $155-165/ton FOB, and in early spring in the Central Valley, it will be in the $180-190 range, Hoyt said. “If milk prices were to improve to $16/cwt or higher, the supreme alfalfa hay market would move up $20/ton or more.”

Washington growers can expect big bales of top dairy and export alfalfa hay to bring $150-160 FOB. Prices could improve, of course, if milk prices rise.

“The true test is how high exporters are willing to push the market on premium export alfalfa hay – given the higher costs of exporting hay from the Pacific Northwest. We saw something happen in 2010 that we had never seen before … and that is that California overtook the Pacific Northwest in the amount of hay that is exported. And the reason is that the ocean freight rates out of Long Beach and other California ports are much more competitive.”

Predicting Idaho hay prices is a major challenge, Hoyt said. “But I believe supreme alfalfa hay prices will be in the $140-150 FOB range, unless milk prices are still below cost of production, which would pull prices lower.”

His supreme alfalfa hay price forecast of $150-160 FOB in central and northern Nevada is based on a $200-215 price in Tulare, CA. Western Nevada prices will be a little higher.

In Utah, supreme alfalfa hay prices could be $140-150/ton, as California dairies will need the high-quality hay to blend with mid-quality summer hay. That depends, however, on availability and continued competitive dry van freight rates. Premium export alfalfa hay will be in more demand and prices will be a little below those of top milk-cow hay.

Arizona dairies will be as bearish on alfalfa hay prices as they were in 2010, Hoyt said, if milk prices are at negative cash flows. But there will be less hay next year. “Additionally, with strong retail and export demand, combined with demand from California dairy hay buyers, Arizona dairies may have to pay more than they want for hay. Supreme alfalfa hay prices will be around $140-150 FOB in Parker-Poston and possibly a little lower closer to Phoenix dairies.”

Alfalfa hay prices could rise if corn prices continue strong, as dairies will cut back on corn and add alfalfa in lactating cow rations. “That is why my predictions on prices may seem high if milk prices fall to the $13-13.50 level or lower. I believe hay supplies will be low enough in 2011 to keep the market from dropping substantially. Based on dairy cow numbers, there will not be an abundance of hay.”

In areas of the West this fall, there was a strong demand for retail hay. Some think premium retail hay could hit $200/ton in California’s Central and Northern valleys, Hoyt said.

View Hoyt’s proceedings paper for more details.