Alfalfa prices are unlikely to move much between now and the first cutting of the 2012 crop in the Pacific Northwest, according to market analysts with Northwest Farm Credit Services (NFCS). In its end-of-the-year Hay Market Snapshot, NFCS noted that “nearly all of the alfalfa stocks in the region are committed, and nearly all have been paid for as buyers locked-in supplies earlier in the season.”
During the rest of the marketing year, there may be some aggressive bidding for the pockets of hay still in growers’ hands. “But prices probably have limited upward potential as new-crop hay becomes available.”
The report pegs the following as “factors to watch” in the months ahead:
●Milk Prices. Barring an unexpected upward turn in milk prices this year, dairies will be hard-pressed to support hay prices at higher than current levels. Continued strong dairy product exports remain a key to milk price support.
●U.S. Dollar. Worries about the debt crisis in Europe have made the U.S. dollar stronger in recent months. That makes hay and dairy exports more expensive and could slow demand for goods from the U.S.
●Competing Crops. Good prices for less resource-intensive crops like barley and wheat could cause alfalfa growers to move away from hay production. “Although alfalfa prices are attractive, the market remains somewhat risky given uncertainty in the dairy sector. Additionally, alfalfa stand establishment and water costs may be high in 2012.”