Short supply pushes alfalfa prices and acreage higher
Roughly half of the country is experiencing dry to severe drought conditions, yet analysts are confident that the nation’s growers will seed at least the same number of acres to alfalfa this spring as they did last year. Corn prices near $6 per bushel will not be strong enough to change their minds.
"Prices for alfalfa have gone up so tremendously that the income growers can get from alfalfa can match the income they would get from corn," says Dan Undersander, University of Wisconsin hay specialist. "Dairy regions, where farmers grow alfalfa to feed it, will maintain acreage, and other regions with good markets for alfalfa will leave it in. I don’t think we’ll see a decline in alfalfa acreage this spring."
U.S. alfalfa prices are at record highs, despite historically low cattle numbers and one of the mildest Decembers on record in the heartland. Even so, forage demand is expected to remain strong, keeping supplies tight.
"With cattle prices increasing, there is interest to increase beef herds," Undersander says. Milk prices are also expected to remain relatively strong in 2012, which means high-quality hay will be in high demand for dairies.
Even in states experiencing severe drought for the second straight year, alfalfa growers are optimistic. "I see more people planting hay because prices and demand are both so high," says David Sterrett, a hay grower in New Mexico’s Pecos Valley and a member of the board of the New Mexico Hay Association. "The Pecos Valley will be growing more alfalfa this year than last. People will probably plant less corn to make way for alfalfa."
Alfalfa prices in New Mexico in late December were between $350 and $450 per ton. "That’s the highest I’ve ever seen it," Sterrett adds.
Last year, Pecos Valley growers came to the end of a five-year water allotment period in which they were allotted 17.5 acre-feet during that time span. By midyear, many growers had run out of irrigation water, which cut into 2011 alfalfa production. When the new growing season starts, alfalfa producers will have a fresh water allotment, and precipitation in eastern New Mexico has
"We had a foot of snow for Christmas," Sterrett says. "We’ve been so dry for so long. It was just what we needed. We should have a good spring."
In Kansas, where some stands sustained damage from drought, growers will also likely add to their alfalfa acres. "I think we could see an increase in hay acres this year in Kansas," says Steve Hessman, USDA Hay Market News reporter. "Hay growers want to get their acreage back."
Hessman doubts Kansas hay growers will fall prey to strong corn pricesthis year. "The current forage shortage will keep them in hay," he says.
Larry Redmon, state forage specialist at Texas A&M University, agrees: "It takes a lot of water to grow either corn or alfalfa, and the return on any hay crop is pretty good right now." Moreover, he adds, higher nitrogen prices favor alfalfa. "If I was in alfalfa, I would not be easily moved into corn."
Hay supplies are so tight that even if more alfalfa is planted and growing conditions are good, prices will stay high for another year, Sterrett says.