Until dairies show some profit, most of the West’s hay prices aren’t likely to get above $200-220/ton for early spring, dairy-quality hay. But California’s top-quality first-cutting hay could sell for $220-$230/ton (f.o.b. stack) in the Imperial Valley and $240-250/ton in central California.

That’s according to Seth Hoyt, market analyst and author of The Hoyt Report. Hoyt spoke at the Feb. 12 World Ag Expo Forage Seminars sponsored by Hay & Forage Grower and Mycogen Seeds in Tulare, CA.

“I don’t see a supply problem with hay in the West. What I see is a demand problem with the dairies. And the milk price will be the key,” said Hoyt.

“We kept hearing, the last eight months, dairy economists talking about milk prices getting better in early 2013. If you’re in central California, you start to get the mentality of someone from Missouri: Show me. Show me it’s going to get better. It hasn’t gotten better. We still have too much milk in the U.S.”

Corn-grain prices softened to $313/ton delivered the week of Feb. 11 to Tulare-Hanford dairies, he added, and a large Midwestern corn crop this growing season could keep Western hay prices in check.

Hoyt predicts, overall, lower alfalfa acres in the West and a 3-5% drop in California. “But you’re going to see more Roundup Ready alfalfa in the mix. In California you’re probably going to see 50% and maybe as high as 60%,” he said.

Expect strong export hay demand again this year, especially to China and the United Arab Emirates (UAE). “The government of China wants to double milk production the next five years. But they’re going to have to have quality hay and they can’t currently grow much quality hay in China. They’re going to need to buy hay here … and other places,” he said.

The timothy and orchardgrass markets should also show strong demand in 2013, Hoyt added.