Keep a close watch on alfalfa hay exports to China for a hint on where prices in Western states are headed in the months ahead, advises Katelyn McCullock, dairy and forage economist with the Livestock Marketing Information Center in Denver, CO.
Total U.S. alfalfa export volume escalated last year, increasing 14% over that of 2010, according to USDA’s Foreign Agricultural Service. China played a major role, buying more than 177,000 metric tons of U.S. alfalfa, up from 140,000 metric tons in 2010.
Strong buying by the Chinese is continuing so far in 2012. During the first three months, nearly 97,000 tons of alfalfa hay were shipped to China by U.S. export firms. “By the end of the first quarter, they already purchased more than half of all the alfalfa they bought from the U.S. last year,” says McCullock.
While many market watchers expect China to continue buying at a steady clip, McCullock says that’s not a sure thing. “China’s needs are difficult to anticipate because they haven’t been in the U.S. market very long. We don’t have a lot of years of data to establish any kind of trend. Just three years ago, for example, they bought less than 75,000 metric tons of alfalfa from the U.S. Will the strong demand continue? We won’t know for awhile.”
If export sales remain strong, McCullock says alfalfa prices in the far West, where the lion’s share of the exported alfalfa is produced, will likely remain near last year’s levels during the 2012-13 crop year. On the other hand, if sales to foreign buyers lag, prices there could fall off slightly due to a 1% increase in production brought on mostly by a slight uptick in alfalfa acres this year.
California farmers averaged a $237/ton alfalfa-hay price during the May 2011 through April 2012 marketing year, according to USDA.