Despite recent rains, drought effects are keeping hay prices high in California. As a result, growers and livestock producers remain nervous about available and future forage supplies. Overall, hay prices will be higher across the West the first part of 2014, said market analyst Seth Hoyt at World Ag Expo.

Last week’s prices for Imperial Valley premium-supreme alfalfa hay – that buyers aren’t taking the time to quality-test so others can’t buy it out from under them – were at $250-260/ton fob.

That’s a turn-around from Hoyt’s mid-December prediction – made before drought took hold – of lower hay prices following the drop in corn grain prices.

“I gave a talk in Reno on Dec. 12 and estimated the Imperial Valley market between $215-230/ton. But I made the comment: ‘If we don’t get rain, all bets are off.’ Well, all bets are off,“ he told a standing-room-only crowd at the Feb. 11 Forage Seminars hosted by Hay & Forage Grower and Mycogen Seeds.

Hay dealers are telling some California Central Valley dairy producers that the Imperial Valley alfalfa hay they are buying for them won’t be tested before it’s bought. Dealers are eyeballing quality so producers don’t lose the hay by taking the time to test it, said Hoyt, author of a marketing newsletter called The Hoyt Report. First-cutting supreme alfalfa in central California could reach $270-280/ton fob or higher, he forecasted.

“We’re in an environment in which we don’t know how much production we’ll get. If we don't get more water and growers can’t get their summer alfalfa hay cuttings, then there is a concern as to how much feed we’re going to have for dairy cows.”


 

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In Utah and Idaho, supreme alfalfa hay first cuttings could bring between $215 and $230/ton, Hoyt suggested. “Some growers in southern Utah have been bid (contracts for) $220-230 for the season and have turned them down. They are thinking the market is going to be like in 2011, where it got to $240-250. Will it get that high? I don’t know.”

Hay trucked into California from other Western states may incur higher freight costs because of a new California truck emissions law, Hoyt warned. “If that hay is delivered into Turlock and Tulare for $310-320/ton, you can back out the freight and you are looking at around $230-240/ton fob for supreme alfalfa hay in central and northern Nevada. Obviously, the fob price will vary depending on delivered prices to California.”

In Washington, he said, “dairies will be aggressive on first-cutting because they’re going to need quality alfalfa hay. It will be interesting to see where the Imperial Valley and central California premium export alfalfa hay markets are when first cutting comes off in Washington. There is a chance that, if the Washington alfalfa hay price is about  $25/ton below Imperial Valley and central California prices, Washington exporters could be competitive by paying less for hay  – to make up for lower ocean freight rates from California.