Respected California market specialist Seth Hoyt doesn’t scratch his head much. Yet with the many complicated issues facing the western alfalfa industry, he and others are uncertain over where hay prices will head in 2016.

“The outlook for (2016) alfalfa hay prices is the hardest to predict in the 45 years I’ve been associated with the (western) alfalfa industry,” says Hoyt, editor of The Hoyt Report newsletter.

Hoyt was the lead off speaker at the 2015 Western Alfalfa & Forage Symposium held in Reno, Nev. in December. He delved into the many factors which impact alfalfa prices.

Among the factors include the ongoing drought, milk prices, slowly falling California milk cow numbers, large hay inventories held by dairies, acreage competition from tree nuts in California, alfalfa hay export strength, plus feed competition from corn silage, wheat straw, and almond hulls.

Overall, Hoyt glared into his crystal ball, saying the strongest prices for alfalfa growers in 2016 may be in higher quality hay.

“The general industry feeling is that supplies of feeder dry-cow hay remain large in the West so that market will likely continue at depressed price levels. How long will it take that market to clean out? I don’t know.”

That said, 2016 season could be a tough season for feeder hay prices. A lot depends on how much snow falls this winter in the West which could increase the demand for feeder hay for beef cattle producers.

Hoyt’s resume includes more than 25 years as a marketing specialist with the California Market News program, plus nine years with the California Agricultural Statistics Service in Sacramento.

Almond impact

Hoyt discussed the growing trend in California toward more tree nut plantings, especially in almonds and pistachios, and to some degree at the expense of alfalfa.

According to the National Agricultural Statistics Service, California alfalfa hay acreage has fallen from about 1.1 million acres in 2006 to under 820,000 acres today. In the same time frame, California almond acreage increased from about 750,000 acres to one million acres plus.

“In the years ahead, California will see more tree acreage and fewer alfalfa acres,” Hoyt noted. “Almonds continue to make money,” even with some new ground for almonds selling for around $35,000 an acre.

“It’s unbelievable,” the hay specialist said.

Slightly fewer cow numbers

For alfalfa hay growers in other areas of the West, reduced California alfalfa acreage could be a boon for them. Hoyt shared a PowerPoint slide showing declining California dairy cow numbers – estimated at about 1.77 million currently. Yet the cow decline is slow.

“We will continue to see California cow numbers go down but the number will not fall off a cliff,” Hoyt said. The trend to watch, he says, is whether California dairymen will need to purchase more out-of-state grown hay.

Alfalfa rate per cow

Five to 10 years ago, California dairies fed 10-15 pounds of alfalfa hay per cow. The average in the second quarter of 2015 was 8 pounds. Today, some California dairymen are feeding 3-5 pounds per cow.

With less instate-grown hay, Hoyt says most California dairymen are unlikely to react by removing all hay from cow feed rations. While it’s true that some dairies are not feeding any alfalfa hay, he says it’s a minority of the dairies.

Hoyt said, “Dairymen don’t want to remove alfalfa from the cow’s diet completely since alfalfa hay increases milk production. Bigger than that is alfalfa hay helps the health of the cow.”

Hay export forecast

Meanwhile, Hoyt said exporters he has visited with have mixed thoughts on hay exports from West Coast in 2016 but some believe exports of alfalfa hay will remain at strong levels in 2016. According to the U.S. Department of Commerce, overall West Coast hay exports increased 5 percent between January 2014 and January 2015.

After the port slowdown was settled in March, baled hay exports increased dramatically for several months with export from California ports outpacing Washington ports.

From January – September 2015, West Coast alfalfa hay exports to China were sharply higher at 30 percent above the previous year. Note that this is even with the port slowdown and a large explosion which rocked China’s largest port which temporarily altered shipments.

“The Chinese are buying the heck out of our alfalfa hay,” Hoyt stated.

Turning to the United Arab Emirates (UAE), West Coast alfalfa hay exports to the UAE blossomed in 2013 to about 650,000 metric tons. Exports then dropped like an anchor tied to excess product on hand.

The UAE is a country located at the southeastern end of the Arabian Peninsula on the Persian Gulf.

While the UAE is buying hay from other countries, the amount of imported U.S. alfalfa hay is trending higher. Hoyt’s export contacts suggest U.S. tonnage could climb back towards the 300,000 metric ton range but not return to the big tonnage seen in 2013.

Japan is a mature market for West Coast-exported hay. Japan has hay inventories on hand, plus is buying cheaper oaten hay from Australia and less expensive Japanese government subsidized rice straw.

Imports of sudangrass hay into Japan from the West Coast are down about 4 percent from a year ago for the same reasons as stated above.

For the timothy hay market, exports from U.S. Pacific Northwest ports to Japan are down about 4 percent.

Turning to the retail hay market, Hoyt discussed prices in California’s lower desert areas. Some growers in the Blythe area of Riverside County (Palo Verde Valley) in the summer and early fall pf 2015 switched from growing fair to good quality hay priced from $95 to $130 per ton to retail hay trading from $160 to $190 per ton to maximize more dollars per acre.

Grass hay market

In grass hay market, Hoyt said the price for orchardgrass hay grown in the northern California mountains remained unchanged in 2015, compared to the previous year’s price amid strong market demand from retail buyers for horses. Premium orchardgrass hay sold well while some hay impacted by rain and cut later was harder to sell.

The same is true for retail timothy hay in the northern mountains.

Hoyt was asked a question about the widening gap between lower export shipping rates from California ports compared to those in the Pacific Northwest. He noted that shipping costs from Long Beach, Calif. to China are much less than the costs to ship hay from Seattle to China.

He noted that the last time he checked on this about a year ago which he thinks is still the case that the cost to ship a container of alfalfa hay by truck from Imperial County to Long Beach is more than shipping it by ocean vessel from Long Beach to China.

“It’s pretty incredible.”

He said two exporters in Washington State have built presses east of Los Angeles over the last year to take advantage of lower ocean freight rates from Long Beach.

Will China accept U.S.-grown GMO hay?

The hay specialist was also quizzed by Western Farm Press about China’s zero tolerance on importing U.S.-grown GMO hay. He said some exporters believe China could possibly accept GMO hay as early as 2016, while others believe China’s zero tolerance policy may not change it as a tool to help the country control alfalfa hay supplies.

“Right now the jury is still out on that,” Hoyt said.

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