Hay acreage declined last year, and wet weather interfered with the harvest in much of the country. Those two factors seem to be having the greatest impact on hay buyers and sellers on the East and West coasts.

In the East, frequent rains brought good production, but growers had trouble harvesting good-quality hay.

“There's plenty of junk to be had, but if you want the good stuff you really have to pay for it,” says Marvin Hall, Penn State University extension forage specialist.

Prices for premium-quality hay are ranging from $150 to $180, according to Hall.

“I anticipate prices will stay high until early March,” he says. “Then producers will start balancing their rations differently so they can get by with what they have until the first cutting.”

On the opposite coast, some growers in California and eastern Idaho ran out of irrigation water in 2004, and weren't able to take all of their last cuttings.

“Some California growers are switching to cotton and almond trees because they take less water than alfalfa,” says Jack Getz, Moses Lake, WA. “Supplies of both high-quality and feeder-quality hay are very, very tight in California.”

Delivered prices for supreme-quality hay are running $175-195 in California, according to Getz, who heads USDA's Market News for Washington, Idaho, Oregon and California. “Those are the highest prices I've seen since the late 1990s.”

Prices are much lower in the Midwest, which surprises Dave Petritz, Purdue University ag economist.

“For example, hay prices in Illinois haven't done what I thought they would,” says Petritz. “High-quality hay is running $120-140/ton there. With that state's horse and dairy markets, those prices should be stronger to reflect the shortage of high-quality hay.”

Petritz, who has closely monitored hay supply trends and prices for years, offers one possible explanation.

“Maybe we spent so much time talking last summer about how there's not going to be much high-quality hay, that many nutritionists said, ‘Okay, I can figure this out,’ ” he surmises. “Perhaps Midwestern dairy farmers are doing a good job of juggling TMRs with cheap corn, cheap soybeans and a lot of silage.”

For Bob Humpal, the hay market started to weaken in January.

“Prices were good until the first of the year, but now they've softened about $10-15/ton,” says Humpal, owner of Ft. Atkinson Hay, Ft. Atkinson, IA. He runs weekly hay auctions year-round there, and semi-monthly auctions during winter in Cannon Falls, MN.

“We're getting a lot of hay in right now,” he reports. “We usually sell 80-100 loads at each auction, but we sold 110-120 at the last couple. The hay's coming in from Kansas, Nebraska, Minnesota and Iowa.”

USDA's January Crop Production report revealed that growers harvested 61.9 million acres of hay in 2004 — the lowest number since 1952. In 2003, 63.3 million acres were harvested. Alfalfa was harvested from 21.7 million acres, compared with 23.6 million the previous year.

However, ample rainfall in some parts of the country brought high yields. Record hay yields were established in Arkansas, Louisiana, Missouri, Pennsylvania, Tennessee and Washington. The overall average yield was 2.55 tons/acre, 0.06 ton higher than in 2003.

Consequently, total hay production was up slightly, at 158 million tons. Production of alfalfa and alfalfa mixtures totaled 75.4 million tons, down 1% from the 2003 total. Yields averaged 3.47 tons, up 0.23 ton from the 2003 yield.

Stocks of all hay stored on farms totaled 114 million tons on Dec. 1, 3% more than on that same date in 2003. Stocks increased in most of the southern Great Plains states, and decreased in much of the West. In California, increased demand by dairy producers resulted in lower supplies late in the year.

Barb Kinnan, marketing director for the Nebraska Alfalfa Marketing Association, was surprised that January's report showed a 15% drop in alfalfa production in that state.

“I would believe that production is definitely down, but I'm surprised the figure is that high,” says Kinnan.

Nebraska's ongoing drought and declining cattle numbers contributed to the decline, she adds. In addition, frequent rain showers delayed last year's first and second cuttings, which impacted season-long production for some growers.

“Dairy-quality hay is in short supply in this area,” says Kinnan. “Dairy producers are being forced to lower their standards on what they've typically been feeding. If they're used to feeding 200-RFV hay, we're seeing them scale back to 160- to 180-RFV hay.

“On the other end of the spectrum, our low-end inventories are sky high. We have low-quality hay sitting around from 2004 and 2003.”

She says dairy hay prices have stayed in the $100-140/ton range for several years, regardless of the supply.

USDA also reported that growers seeded 2.79 million acres of alfalfa and alfalfa mixtures during 2004, 10% fewer than in 2003.

“If I were a seedsmen and looked at a 10% drop in seeded acreage for 2004, I would be very concerned,” says Petritz. “The Corn Belt has always been a bastion of support for alfalfa seed purchases.”

In California and the Northwest, this winter's snowfall will largely determine how much alfalfa will be seeded in 2005, says Getz.

“There's been an increase in snowfall, but warmer temperatures in the Northwest have melted some of it,” he says. “Of course, one winter of good snowfall will not make up for two to five years of bad conditions, but it's a good start.”