Hay supplies will remain tight and prices high at least through spring 2009, predicts Matt Diersen, South Dakota State University ag economist.

Diersen doubts that the high prices will result in a significant increase in hay production this year, given the record-high price levels of corn, soybeans and wheat.

“I think it'll be another close year in terms of the ability of hay growers to meet the demand that's out there,” he says. “Demand is good from one end of the country to the other, and stocks of hay are nowhere listed as abundant.”

Diersen is referring to USDA's January Crop Production report, which estimated Dec. 1 hay stocks by state. The report, issued Jan. 11, also included the agency's final estimate of 2007 hay production. While it contained a few surprises, the report didn't change Diersen's overall view of the hay supply and demand situation for the coming marketing year.

USDA estimated 2007 hay production at 150 million tons, a 2% increase over its previous estimate made in October, and 6% more than the final 2006 amount. Production of alfalfa and alfalfa-grass mixtures, at 72.6 million tons, was 1% higher than the 2006 figure.

Last spring's anticipated switch-over from hay to corn apparently didn't happen on a large scale, as harvested acreage of all types of hay was up 1%, and alfalfa acreage even increased slightly. The final 2007 all-hay harvested acreage figure is 61.6 million, with alfalfa and alfalfa mixtures accounting for 21.7 million acres of it.

Dec. 1 hay stocks were 8% higher than the year-earlier figure, at 104 million tons. But taken at face value, that number may be misleading, says Diersen. The biggest increases by far were in Oklahoma and Texas, both of which had a wet year but now are dry again. Those stocks, probably mostly grass hay, likely will be utilized within the two states.

USDA reported that 11% fewer alfalfa acres were seeded last year than in 2006, but that probably doesn't point to lower production this year, he says. Wisconsin, where growers increased their alfalfa acreage the previous two years, accounted for most of the 2007 reduction.

“I would say alfalfa seedings point to stable acres,” says Diersen.

Although hay prices are at record levels in some states this winter, he points out that the national average price has dropped since peaking just before the 2007 harvest began in most of the country. The National Agricultural Statistics Service reported that the all-hay average price was $133/ton in December, down from $145/ton last May. Supplies were very low then, because the 2006 crop was the smallest since 1988 due to drought.

Diersen doubts that new price records will be set during the 2008-09 marketing year.

“Prices will remain relatively high, but … I wouldn't expect the national price level to get back to what we saw in May last year,” he says.

The next indicator of 2008 hay production will be in USDA's March Planting Intentions report, which will estimate the number of hay acres growers expect to harvest. To put that number in perspective, the all-time-low March estimate was 59 million acres in 1995. In March 2007, growers said they planned to harvest 63 million acres, and the final number came in at 61.6 million.