Surprising jump in milk prices may improve hay market outlook

The recent jump in milk prices has provided a shot in the arm to hay and feed producers in the West. While the increase was not totally unexpected, how fast and how high it rose surprised the industry. Seth Hoyt talked about the impact on the hay market in this interview following his standing-room-only speech at the Forage Seminar at World Ag Expo.

“If the drier conditions continue, we’re going to see a stronger market than what we anticipated last fall, mainly because of less production, less irrigation water,” he said in an interview. “If we are able to get more snow and rain in the coming month or month and a half, it would take some pressure off. But the possibility of us getting back to a normal situation is rather unlikely.”

Even if the record prices began to taper off, he said, dairy buyers will be more aggressive in purchasing hay than they were in 2013, “and we’re going to see more hay go in that direction, and the market will be stronger than we thought throughout the seven states in the West.”

Hoyt said the milk price rise was a surprise because of how high it went. Rabobank, for example, was estimating milk prices could reach $21 per hundredweight at the beginning of this year. No one expected February Class III milk futures to hit $23 per hundredweight.

“But it’s something that was sorely needed in the dairy industry after the last few years in order for them to recoup some money to pay past bills and be on more solid footing financially.”



TAGS: Outlook
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