California Alfalfa & Forage Association

Reason for optimism is continuing to mount for the 2004 alfalfa hay market, with several promising developments surfacing within the last month or so. CAFA's February newsletter carried an article headlined, California Hay Price Outlook Still Bullish for 2004. Written by Seth Hoyt of the California Agricultural Statistics Service, the February article followed a December article in CAFA News that also pointed to several favorable developments that were expected to bode well for 2004.

Late last year sources indicated that the Dec. 1 hay stocks report would likely show a decline compared to 2002. That was the case when the estimate for California came in at 2,048,000 tons, an 8 percent drop in hay stocks from Dec. 1 of 2002.

It often seems like good news comes in bunches and that appeared to be the case in early February. For example, there was significant improvement in the milk futures market, a strong butter market and a firming of cheese prices. The announcement that 2004 supplies of BST will be down around 50 percent was bullish to the 2004 milk market. BST increases milk production and it's estimated that 25 to 30 percent of dairy cows receive it nationwide. This, along with reduced milk production due to winter weather in the eastern part of the U.S., caused milk futures prices to surge higher.

The higher price for protein feeds and feed grains and the ban on feeding blood meal and chicken litter to cattle due to the discovery of mad cow disease (BSE) were also cited as having the potential to have a favorable impact on the alfalfa hay market.

Hoyt pointed out that, “While soybean and cottonseed meal prices have been substantially higher than a year ago, they are now being joined by stronger canola meal and distillers dried grain prices. Adding to the strong protein feed market is the ban on blood meal and chicken litter as cattle feed due to the BSE discovery.” The result has been good demand from some dairy hay buyers for alfalfa hay with higher crude protein tests.

While Hoyt's detailed article in CAFA News was positive, he made an observation that bears repeating. Referring to the BSE discovery, he noted that, “A reminder to all of us in agriculture was how one event can drastically change an ag commodity market. The drop in the live cattle and cattle futures markets the day after the Dec. 23 BSE announcement and the swift ban on U.S. beef exports by many countries was pretty amazing,' he pointed out.

Not just for CAFA members

A major challenge in being an advocacy group for the alfalfa and forage industry is getting an early heads up on developing issues that need CAFA's attention. In a state as big as California, local and regional issues may not appear on the radar screen until they become major issues. CAFA encourages members as well and non-members to keep us informed. CAFA can be contacted at, (415) 892-0167 or by e-mail, [email protected].

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