Hay sellers looking for last year’s record-high hay prices to continue through winter are likely to be disappointed in last week’s USDA Crop Production report.

“Prices will still be high by historical standards, but not as high as what we saw last year or the year before,” says Katelyn McCullock, dairy-forage economist with the Livestock Marketing Information Center in Denver, CO.

The combined estimated U.S. yield for the alfalfa-alfalfa mixed dry hay and other-hay categories will average 2.47 tons/acre in 2013, says Matt Diersen, ag economist with South Dakota State University Extension. “That’s a pretty good national yield. It’s not something that’s going to completely wreck prices for hay sellers. But it certainly does a lot to take some of the supply side pressure off of hay prices.”

USDA estimates U.S. growers will harvest nearly 60 million tons of alfalfa and alfalfa mixes as dry hay in 2013. That’s up 15% from last year’s total, but still the second-lowest hay production level since 1955. Based on Aug. 1 conditions, yields for alfalfa-alfalfa mixes will average 3.39 tons/acre, up roughly one-third of a ton from last year’s average. Harvested area is forecast at 17.7 million acres, up 2% compared to last year’s total.

Production of other hay this year is forecast to total 80 million tons, up 18% from the 2012 total. If realized, that would be the highest production since 2004. As of Aug. 1, USDA was expecting an other-hay average yield of 2.05 tons/acre, up 0.31 ton from last year’s yield total. Harvested area is projected at 39 million acres, unchanged from that of 2012.

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Along with increased production estimates, several other factors will likely work to put downward pressure on hay supplies and prices in the months ahead, Diersen says. There have been reports of recent pasture-and-range-condition improvements in areas hit by drought earlier this summer. That could mean livestock producers will be able to delay feeding supplemental hay until well into late fall or early winter. Likewise, USDA’s decision to allow emergency haying and grazing on Conservation Reserve Program (CRP) acres should boost supply availability in drought-stricken regions.

Alfalfa hay quality has been a concern in areas hindered by weather-related problems during early cuttings. But Diersen believes that will be offset by major boosts in corn and soybean production this year. Plentiful supplies of alternative protein sources like distillers’ grains and soybean meal will limit the upside price potential for higher-quality alfalfa.

The impact of increased grain supplies on alfalfa prices likely won’t be felt until this fall’s harvest. “We’re hearing a lot of reports that many livestock producers are buying hand-to-mouth right now as everybody waits for prices to decline in the fourth quarter of the year,” he says.

But there could also be a positive to lower alternative feed costs for hay growers selling into the dairy and beef markets. “With their margins improving, (livestock producers) will have more dollars available to pay for higher-quality hay if they decide they need it in their rations,” says Diersen.

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