Costs may dip a little, but they'll still be painful for buyers.
Alfalfa hay probably won't be as expensive in 2012 as it was a year ago, but don't look for anything close to a repeat of the low prices in 2009, according to longtime market analyst Seth Hoyt (pictured here).
Speaking at the Western Alfalfa & Forage Conference in Las Vegas in December, Hoyt said dairying's financial meltdown in 2009 changed how growers look at crops they grow for the dairy industry. "They have become much more aware of milk prices and profitability, or lack thereof, in the dairy industry and the ability of getting paid. Just as dairymen will never forget 2009, hay growers won't either.
"The historical pattern of planting substantially more alfalfa after a very profitable year, like 2011, has been replaced with a more cautious approach of looking at the financial condition of the dairy industry and at crop options," he added.
Hoyt was reluctant to make price predictions for 2012, due to uncertainty about market push back against last year's huge prices, the tepid global economy, U.S. milk prices, and the dairy industry's overall financial health.
"I believe prices on the first alfalfa hay crop in the West in 2012 will be the strongest market of the season," he said. "The reason is supplies of higher-quality alfalfa for milk cows will be very tight coming into the new crop season. How high prices will be will depend on how high milk prices are and supplies.
"Prices on second and following cuttings in the West will decline, but not drastically, and I believe growers' average prices for the 2012 season will be down at least $30 per ton and could be as much as $50 per ton lower if alfalfa acres and production are higher than expected and milk prices are lower than expected."