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Hay Market Experts Take A Look At 2006
Hay growers are getting more market-savvy as interest
in the cash hay market increases, says Dave Petritz, Purdue University
ag economist. When taking a look at what 2006 may hold for hay
producers, Petritz cites fuel costs as a continuing concern. "The price
of fuel caught a lot of attention in the fall, and I think it has driven
more interest in local hay auctions," he states. "I think this will
continue to be a high-priced energy market. If I were a Great Plains hay
grower or dairy producer, I would be concerned about fuel costs." He
notes that producers have more labor-efficient hay equipment choices
than ever before, and hay equipment is coming in a wider variety of
sizes. Petritz is seeing more demand for straw in the Midwest as 2006
kicks off.
How many acres of alfalfa hay will there be in California in 2006?
That's the big question, according to Seth Hoyt, statistician with the
California field office of the National Agricultural Statistics Service.
"Seed industry representatives and industry sources I've talked to are
predicting between 5% and 10% more acres than in 2005," Hoyt says.
"Nobody I've visited with thinks we will see a repeat of the 15% jump in
acres we saw in 2002 because permanent crops have displaced alfalfa hay
acres the past three years, with almonds being the bigger one in some
areas." Hoyt says the difference in water costs between growing almonds
with drip irrigation vs. irrigating alfalfa makes almonds more
attractive.
A number of old alfalfa stands will probably be rotated out of
production in California during 2006. Hoyt says a recent water deal
between the Palo Verde Irrigation District and the Metropolitan Water
District of Southern California resulted in a substantial decrease in
alfalfa hay acres in the Palo Verde Valley. The total alfalfa acres in
the valley slipped to 40,633 as of Dec. 1, 2005, down 9,000 acres from
the 2004 figure. Hoyt says this offsets the 9,000 more acres of alfalfa
in the Imperial Valley during the same period. "Having said all that,
sources indicated that alfalfa hay planting was heavy in some areas of
the central and northern valleys," Hoyt reports. "With another
substantial drop in upland cotton acres predicted in 2006, some cotton
ground will probably be planted to alfalfa hay in the central valley. It
has also been reported that some dairies have increased their acres of
alfalfa, but much of this may be for green-chop rather than hay." Hoyt
say another area to watch is the Sacramento Valley. Processed tomato
growers are not coming to terms with processors on contracts for 2006.
"Sources indicate that in the coming weeks, some of these growers could
plant alfalfa hay if there is an impasse," he says.
Even if alfalfa hay acres in California were up 10% in 2006, the market
on early cuttings could still be strong because the pipeline is very
low, according to Hoyt. Sources believe hay carryover will be down in
spite of higher imports from other states. "The barn-hay market this
winter will probably be very bullish," he says. "Many dairies will be in
need of hay by late winter and early spring, particularly high-test,
milk-cow alfalfa hay." The demand for higher-test alfalfa hay has grown
as dairy producers strive to increase milk production. Additionally,
dairy cow numbers in California have increased 100,000 head over the
past three years. Alfalfa hay growers should find strong demand for
early cuttings in 2006.
"Depending on planting and production, the alfalfa hay market could move
lower by late spring and summer," Hoyt says. "Some believe the overall
alfalfa hay market in California in 2006 will be $10-20/ton below 2005.
I wouldn't argue with that. This would still be the second-highest
market on record." However, if acres come in above predictions, the
market will experience increased downward pressure by summer.
Conversely, if acres are lower than expected, Hoyt says the year-to-year
market change will be less severe.
"Another thing to watch are milk prices," he states. "Some are
predicting a $1-2/cwt drop in milk prices during 2006. If dairy producer
margins dip into the negative, demand patterns for alfalfa hay may
change. The hay industry discovered from past experience that dairies
will get pretty creative in cutting feed costs when they're losing
money. One would not expect demand patterns to be altered to the extent
we saw in 2003 with $9.25-9.50 milk." Consumer demand for dairy products
has improved in recent years. This, combined with positive impacts from
the Cooperatives Working Together program to reduce dairy cow numbers,
in addition to dairy product exports, has been good for the industry.
"When you consider the amount of milk produced in 2005 in the U.S., it
is amazing that milk prices are as good as they are," Hoyt says. "But
there are caution flags flying for 2006."
He concludes that the alfalfa hay market in California may be strong
early in the coming season but could soften by late spring and summer.
The amount of decline will depend on alfalfa acres and production the
first half of the season, available supplies of alfalfa hay in
surrounding states, and profitability in the dairy industry.
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Calendar
**Jan. 7-22 -- National Western Stock Show,
National Western Complex, Denver. Learn more at www.nationalwestern.com.
**Jan. 18 -- Tri-State Hay and Pasture Conference, Garret
College, McHenry, MD. Call 301-334-6960 for registration information.
Learn more at agnr.umd.edu/ForageEvents.
**Jan. 18-19 -- Washington State Hay Growers Association Convention
and Trade Show, Three Rivers Convention Center, Kennewick. Learn
more at www.wa-hay.org.
**Jan. 19 -- Southern Maryland Hay and Pasture Conference, Isaac
Walton League Outdoor Education Center, Waldorf. Call 301-475-4484 or
visit agnr.umd.edu/ForageEvents.
**Jan. 19-20 -- Delmarva Hay and Pasture Conference, Delaware
State Fairgrounds, Harrington. Contact Richard Taylor at rtaylor@udel.edu or 302-831-1383, or
visit agnr.umd.edu/ForageEvents.
**Jan. 19-20 -- Southwest Hay Conference & Trade Show, Ruidoso
Convention Center, Ruidoso, NM. Learn more at info@nmhay.com, or call 505-626-5677 or
505-622-8080.
**Jan. 21 -- Winter Grazing of Tall Fescue Pasture Walk, Wye
Research and Education Center, Wye Angus Facility, Queenstown, MD. Learn
more at agnr.umd.edu/ForageEvents.
**Jan. 23-24 -- Silage for Dairy Farms Conference, Radisson Penn
Harris Hotel, Camp Hill, PA. Call 607-255-7654 or visit www.nraes.org.
**Jan. 24 -- Central Maryland Hay and Pasture Conference, Carroll
County Agricultural Center, Westminster. Contact Doug Tregoning at dwt@umd.edu, or call 301-590-2809.
**Jan. 25-26 -- Heart of America Grazing Conference, Cave City,
KY. Call 270-365-7541 or visit www.uky.edu/ag/forage.
**Jan. 31- Feb. 1 -- Midwest Forage Association 2006 Symposium and
Annual Meeting, Stoney Creek Inn, Mosinee, WI. Call MFA at
651-484-3888.
**Feb. 3 -- Northern Indiana Grazing Conference, Shipshewana.
Call 260-463-3471, ext. 3.
**Feb. 7-8 -- Nebraska Alfalfa Marketing Association's Mid-America
Alfalfa Expo, Kearney. Contact Barb Kinnan at 800-743-1649 or visit
www.nebraska-alfalfa.com.
**Feb. 7-9 -- Producing Cash Hay for Virginia's Equine Industry
Workshops, Feb. 7-Armory in Chatham; Feb. 8-Southern Piedmont
Research Station, Blackstone; Feb. 9-Tidewater Research Station,
Suffolk. Registration for each will begin at 8 a.m. and the programs
will end at 3:30 p.m. Early registration deadline is Jan. 27. Contact
Chris Teutsch at cteutsch@vt.edu,
or call 434-0292-5331, ext. 234.
**Feb. 14-16 -- World Ag Expo, Tulare, CA. Learn more at www.worldagexpo.com.
**Feb. 22-23 -- Pennsylvania Hay and Silage Conference, Holiday
Inn, Grantville. Contact Lisa Crytser at 814-865-2543.
**Feb. 23 -- Kentucky Alfalfa Conference, Lexington. Contact
Garry Lacefield at 270-365-7541, ext. 202.
**Feb. 25 -- Bi-State Forage Institute: Focus on Hay, The
Stratford Inn, Harvard, IL. Call 847-223-8627.
**Feb. 27-28 -- Idaho Hay and Forage Association Meeting, Red
Lion Canyon Springs Hotel, Twin Falls. Learn more at www.idahohay.com/.
**March 10-14 -- 2006 American Forage and Grassland Council
Conference, Westin Riverwalk Hotel, San Antonio, TX. Learn more at
www.afgc.org, or call
Dana Tucker at 800-944-2342.
**March 14-15 -- Midwest Hay Business Conference and Expo,
Ramkota Hotel, Sioux Falls, SD. Sponsored by Hay & Forage Grower.
**April 21-23 -- Midwest Horse Fair, Alliant Energy Center,
Madison, WI. Learn more at www.midwesthorsefair.com.
**April 28-30 -- Minnesota Horse Expo, Minnesota State
Fairgrounds, St. Paul. Learn more at www.mnhorseexp.org.
**Sept. 7-9 -- National Hay Association 111th Annual Convention,
Snow King Resort, Jackson Hole, WY.
**Oct. 3-7 -- World Dairy Expo, Alliant Energy Center, Madison,
WI. Learn more at www.worlddairyexpo.com.
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