This is the first time that alfalfa hay prices have averaged $100/ton since May 1998.
Prices increased the most in the West and South, where forage production was substantially reduced last year. In Texas, hay production declined 32% in 2000 and alfalfa prices averaged $140/ton in mid-April. That was the highest state average in the country.
The recent release of USDA’s May 1 Hay Stocks report provides an end-of-the-year demarcation for the hay marketing year that began May 1, 2000. The hay stocks data is the "bottom line" regarding production and disappearance of hay during the past year.
Stocks of all hay on farms totaled 21.1 million tons on May 1, 2001, down 27% from last year’s figure. This reduction reflects a return to near-normal stock levels following last year's near-record high. Disappearance of hay between Dec. 1, 2000, and May 1, 2001, totaled 82.6 million tons, 3% higher than the previous year’s amount. Disappearance during the entire hay marketing year totaled 159.9 million tons, an increase of 2.7%.
Twenty-seven states had lower hay stocks. Most are west of the Mississippi River. Ten states west of the river reported stocks at or below 50% of last year's levels. The Southeast was also hurt by drought, with Alabama, Florida and Mississippi also reporting stocks at or below 50% of year-ago levels.
Stocks rose in the Ohio Valley and Northeast after favorable weather in 2000 brought an increase in production following the 1999 drought. The largest increases in stocks were in Kentucky, Pennsylvania, Virginia and West Virginia.
Looking ahead, hay growers expect to harvest nearly 64 million acres this year, a 7% increase from the 59.9 million harvested in 2000. The 4-million-acre increase in hay would more than offset the 3-million-acre decline in planting intentions for the eight major field crops.
Acreage increases are intended in 26 states. The greatest increases are planned in the Great Plains, where 2000 acreage and production were reduced by dry weather. Hay is an important feedstuff for the beef and dairy industries in the Great Plains. Hay growers there are responding to the higher prices of the past year by sharply increasing production.
Producers in Texas intend to increase harvested hay acreage by 1.78 million, nearly 43%. This would be a new record acreage. Much of the unseeded winter wheat acres and some corn acres in Texas will likely be switched to hay in 2001.
Growers in only six states intend to reduce their harvested acres. They include Washington, Oregon, Nevada, Kentucky, Connecticut and Maine.
Summer weather will be the major determinant of the direction of hay production and resulting prices during the year ahead. If weather remains dry in the Great Plains and Southeast, prices will increase even more. Producers will benefit by the increased incentives (higher prices) to ship hay into the deficit areas.
However, hay growers must remain wary of potential oversupplies of hay as well as feed grains and oilseeds. If hay production increases in the Northeast and supplies become excessive, prices could decline sharply.