Alfalfa hay prices will likely strengthen through winter and may stay higher than 2009 levels for the 2010 crop, says Matt Diersen, South Dakota State University ag economist.

Diersen says a smaller-than-expected 2009 crop, a January cold spell in the North and recovering milk prices are factors that will put upward pressure on alfalfa prices this winter.

In its January Crop Production report, USDA estimated 2009 alfalfa production at 71 million tons, a million tons below its previous estimate made in October. Production of other hay, estimated at 80.8 million tons in October, was revised to 76.4 million tons in January.

“So there's less hay to go around than we thought,” he says.

The report put Dec. 1 hay stocks at 107 million tons, up 3% from the 103.6 million tons stored on farms on Dec. 1, 2008. Production was up slightly last year, but lower usage explained most of the stocks increase. From May to December 2009, hay disappearance totaled 62.3 million tons compared with 64.2 million tons during the same period the previous year.

Diersen points out that the Dec. 1 hay stocks figure was the highest in five years. “But it's not a burdensome level by any means, and most of it is concentrated in just a few states.”

Hay prices have dropped dramatically from their 2008 peaks, so hay is a more economical dairy ration ingredient than corn and soybean meal. That's another factor favoring heavy alfalfa usage this winter and may point toward stronger prices throughout the year. He notes that returns from growing corn and soybeans continue to look good, and alfalfa seedings were down slightly last year, so alfalfa hay supplies will likely remain tight.

“I don't think the overall hay price is going to go up, but I think the alfalfa price will be better in 2010,” he says.