Good news comes in bunches as an old saying goes, and that appears to be the case in the last month or so with the USDA's Prospective Plantings Report and more positive developments for the dairy industry.
The March 31 Prospective Plantings Report indicates a 90,000 acre reduction for alfalfa and other hay. It's a 6 percent drop from 2003 when California growers harvested an estimated 1,570,000 acres of all hay. Last fall a CAFA member who primarily grows oat hay and some alfalfa called 2003, “the hay season from hell.” It's a comment that most growers would no doubt agree with, but it appears that grain and alfalfa hay will benefit from a more balanced supply-demand situation and an overdue return to profitability for the dairy industry.
The March report lumps all hay together and alfalfa won't be broken out until the USDA issues its June report. Until then, there's room for speculation as to where the 90,000 acre reduction will fall and how it will impact different hay crops. Information so far, however, points to possibly significant reductions for sudangrass hay as well as grain hay.
One interesting development, however, is insight provided to CAFA by Seth Hoyt of the California Agricultural Statistics Service regarding oat plantings for all purposes in the March 31 report. They were 20,000 acres higher than 2003, a statistic that would logically indicate increased oat hay acreage in 2004. But, sources have reported that dairies in central and northern California responded to strong grain markets and the prospects of higher hay prices by planting more oat forage mixes for silage and green chop.
Less cotton gain may be factor
Earlier speculation centering on reduced alfalfa acreage in 2004 could be impacted by developments in the cotton industry. Late last year sources were predicting that cotton acreage in California could increase by 100,000 to as much as 150,000 acres this year. But a decline in the cotton market starting last fall no doubt had an impact on the forecast for 2004. According to the March 31 Planting Intentions Report, cotton acres are expected to increase by 60,000 acres. Nonetheless, the consensus of opinion is that alfalfa acreage will still be down in central California compared to 2003.
What fuels the most optimism, of course, is the financial health of the dairy industry, which has rebounded after two tough years. Sharp increases in milk futures prices on the Chicago Board of Trade and in the statewide overbase milk price are welcome developments for dairymen as well as alfalfa and forage growers. Milk cow quality hay in particular should be a bright spot in the months ahead and could remain strong throughout the year.