Feed prices could be looking better next year for livestock producers. According to USDA's Acreage report numbers released Thursday, hay growers intend to harvest 56.1 million acres of hay in 2016, which is a 3% increase from the prior year. In addition, growers plan to harvest 2% more alfalfa than in 2015 at 18.1 million acres.
According to the report, harvested hay acres are expected to hold steady or increase in most Southern and Western states, which is good news for dairy farmers.
In the West, water is always the biggest factor for alfalfa farmers. This year James Johanson, hay statistician with USDA’s National Agriculture Statistics Service, says water conservation over the years and significant moisture over the winter resulted in full storage reservoirs and spurred an increase in acres.
There are some caveats to Thursday's numbers.
Western hay analyst Seth Hoyt of the Hoyt Report, says many growers in the West are only harvesting one cutting of hay on the acres included in USDA's numbers, which leads him to caution that the report won’t necessarily be an accurate picture of yield volume for the year. Johanson says if a field is cut once for hay or five times for hay, it’s included. “It’s entirely possible that they cut it once and plant it to something else,and it would still count as harvested acres,” he says.
That scenario should be reflected in USDA’s August 12 hay production report. “If they only harvest one cutting, it will be reflected in their total production,” says Johanson, who also says that report will provide a clearer picture of what prices will look like for the rest of the year.
The Acreage report indicates the most significant hay acreage declines are expected to be in the Northern Plains States. University of Wisconsin Madison forage specialist Dan Undersander says this is because many growers in those areas had a hard time getting new seedings to grow. One outlier in the Northern Plains is Wisconsin, which USDA projects will have 100,000 more acres of alfalfa alone.
According to the report, Illinois, Iowa, New York, and Rhode Island are expected to see record lows for all hay harvested in 2016.
Could Prices Stay Low?
The price gap between milk cow quality hay and lower quality hay will remain wide.
“Right now we’re at about $45 per ton difference between good and poor,” Undersander says. “I think we’ll see prices stay in about the same range that they are in, unless there is severe drought somewhere.”
Despite the report, Hoyt says reduced alfalfa production is likely in the West, which will delay a price recovery for alfalfa.
“The lower production will have more of an impact on higher quality alfalfa hay prices which are in tight supply,” he says. “The lower quality alfalfa hay market will take time to recover because of large supplies.”