USDA has reduced its 2011 hay production estimates for Montana and North Dakota, states that earlier had been looked at as sources of abundant supplies. Growers in the two states are now expected to harvest nearly a million tons less than the department projected in August.

That's about the only thing that jumped out at Matt Diersen as he studied the department's October Crop Production report shortly after it was released on Oct. 12. Hay production expectations have also been scaled back for Oklahoma, Texas and other states hit by lingering drought, and increased in Southeastern states that got needed rain from Hurricane Irene and Tropical Storm Lee. But those changes were expected, says Diersen.

Overall, the latest estimates of this year's crop remain mostly unchanged. USDA expects production of alfalfa and alfalfa mixtures to total 64.7 million tons, down slightly from its August forecast and down 5% from last year's total. Based on Oct. 1 conditions, yield is expected to average 3.35 tons/acre, 0.05 ton/acre less than in 2010. Harvested area is forecast at 38.3 million acres, down 4% from last year's number.

Production of other hay is forecast at 67 million tons, also down slightly from August and 14% below last year's production. If realized it will be the lowest production since 1993. Yields are expected to average 1.75 tons/acre, unchanged from the August forecast but down 0.20 ton from 2010's average yield. It would be the lowest U.S. yield since 1988. Harvested area is expected to total 38.3 million acres, 4% fewer than were harvested last year.

Based on USDA's all-hay production predictions and historical data on annual usage, Diersen estimates that Dec. 1 hay stocks will be roughly 94 million tons, 9 million tons below the amount stored on farms on that date last year. With wintertime disappearance equal to that of last winter's – 80 million tons – May 1 stocks would drop to 14 million tons, an all-time low carryover amount.

In addition to domestic usage, disappearance includes exports, which he sees staying strong but perhaps not increasing as they have been in recent months.

"The value of the dollar in relation to other currencies has started to rise," says Diersen. "That's going to make U.S. hay more expensive to foreign buyers."

Still, he thinks hay supplies will be low enough, and prices high enough, to bring some lost acreage back into production in 2012. Acreage gains are most likely on the western fringes of the Corn Belt, where corn doesn't yield as well and livestock numbers are higher, and in dairy areas.

"I wouldn't be surprised if Wisconsin, for example, will have some pressure to shift back," says Diersen.