Hay prices continued to drift downward in much of the U.S. last year, as production headed in the opposite direction.

Whether those trends continue will depend on Mother Nature. But there's potential good news for hay sellers: Dry pastures forced above-normal hay feeding last fall, reducing the total hay supply. And normal winter weather has finally arrived in much of the country. That should begin to strengthen hay prices by late winter.

In early winter, though, prices lagged behind year-ago levels in most areas and trailed 1997 prices by a wide margin. In mid-December, USDA reported the average price of alfalfa at $73.20/ton. That was 10% lower than the year-earlier price of $81.40 and the lowest since 1991 and 1992.

During the past year, prices continued to decline in several major producing states, including Nebraska (-19%), North Dakota (-27%), South Dakota (-24%), and Wisconsin (-35%). According to USDA, alfalfa hay prices averaged in the $30s and $40s/ton in Nebraska and the Dakotas, and the mid-$50s in Wisconsin.

Prices increased during 1999 in only a few states, mainly states where production was sharply reduced by drought. In December, alfalfa prices were over $100/ton only in Kentucky, Missouri, New York, Ohio, Pennsylvania, Texas and New Mexico.

Details of the 1999 hay crop and Dec. 1 hay stocks were part of USDA's January Crop Production report (available at www. usda.gov/nass).

USDA reported hay production at 159 million tons, up 5% from the 1998 total and the highest amount in nearly 20 years. Acreage harvested, at 63.2 million, was up 5% from the previous year's figure, but average yield was down slightly. Texas regained its No. 1 spot in hay production with 13.1 million tons, followed by South Dakota, California and Nebraska.

Alfalfa production totaled 84 million tons last year, up 2% from the 1998 total. Harvested acreage was 1% higher. Yields averaged 3.5 tons/acre, up slightly from 3.48 tons in 1998. California continued to lead in alfalfa hay production, followed by South Dakota and Wisconsin.

Production of "other hay" - all hay other than alfalfa - totaled 75.2 million tons, up 8% from the 1998 total. It was higher in 17 Great Plains and Lakes states but lower in 28 states. Significant declines took place in an area extending from Kansas and Missouri through the eastern Corn Belt and into the Northeast and the Mid-Atlantic States.

Reduced production in those areas, coupled with higher-than-normal fall hay feeding, brought hay stocks down in 29 of the 48 contiguous states. Stocks of all hay on farms on Dec. 1 totaled 109 million tons, 3% less than the year-earlier amount.

Dry weather in the Mid-Atlantic and Midwestern states led to major declines. Stocks were down by more than 15% in several states, including California, Delaware, Idaho, Illinois, Indiana, Kentucky, Ohio, Pennsylvania and Tennessee.

Several Southern states, including, Alabama, Florida, Georgia, Louisiana, Oklahoma and Texas, showed the largest increases in stocks, with increases also taking place in North Dakota and Wisconsin. Weather will be a major determiner of the direction of hay prices during the year ahead. Winter weather has been abnormally mild and dry in the Midwest, South and Southeast. It wasn't until early January that the Northeast received significant snow. Many forecasters are using the "D" word (drought) in their forecasts for the 2000 growing season.

If the dry weather of this winter continues into spring and summer, hay production in the eastern part of the nation could be sharply reduced, resulting in a turn-around in hay prices.

But without a significant reduction in hay production, prices will continue at relatively low levels. Growing supplies of grains and oilseeds will become increased competition for forages in livestock rations.

While producers of high-quality alfalfa will likely continue to enjoy premium prices, the size of these premiums will likely fade if the prices of all hay further decline. This is evident in Nebraska and the Dakotas, where alfalfa prices have declined sharply.

Hay growers need to carefully assess the potential market for increased quantities of their product before further expanding production.

For the rest of the winter, livestock producers in drought-affected areas should carefully assess the feasibility of buying hay in states with surpluses where prices are under pressure.