While no one knows what milk markets will do this year, other fundamentals are supportive for alfalfa prices in 2021.
While alfalfa acres were down 3% in the U.S. in 2020 compared with the 10-year average, there have been some big declines in western states over time, Josh Callen, owner of The Hoyt Report, said during the Idaho Hay and Forage Association annual conference.
Alfalfa acres in 2020 were down 29% in New Mexico from the 10-year average and 22% in Nevada. Acreage in California was down 37%, and that’s been kind of a steady trend, he said.
“It just goes to show that even though a lot of dairies have cut alfalfa out of their ration … California is going to continue to be reliant on its neighbors, mainly Oregon, Idaho, Utah, Arizona for its alfalfa needs,” he said.
Almond acres continue to replace alfalfa acres in California, with a steady investment in trees. There’s a higher upfront cost, but almonds take less labor and less water than alfalfa, he said.
There was a pretty steep drop-off in alfalfa acres in California in 2020, and it’s going to continue in 2021, he said.
While Dec. 1 hay stocks were down 6% in western states, they were up 21% in California. There’s really good demand out of California, he said.
“They’re buying,” he said.
The water issue is also going to be a little iffy for California this year, given dry conditions. It will probably be OK, but the question is what the dry conditions mean for the Colorado River in the longer term, he said.
The price of other proteins is likely to be a big factor in alfalfa market in 2021, he said.
“The big thing going on right now is just overall strength in general commodity prices, what’s that going to do for alfalfa,” he said.
Rolled corn prices went on a tear beginning in August, going from $175 a ton to $250 with some of the highest prices seen since 2013 and 2014. Alfalfa and corn prices tend to follow each other fairly closely, he said.
First-crop alfalfa should have pretty good demand, depending on milk prices, he said.
“You could see some more alfalfa being fed. That could also support it as well. Higher protein prices could make alfalfa more attractive,” he said.
Alfalfa acreage is going to be a little mixed in 2021. The trend toward almond trees in California is likely to continue, but there’ll be more alfalfa acres planted to wheat. And some alfalfa acres could also be replaced with rolled corn and corn silage, he said.
“It’s kind of hard to gauge that dairy situation. Right now, it looks like there could be some more alfalfa being fed,” he said.
He thinks there is going to be good demand for early-cutting hay, with pent-up demand for test hay, especially from foreign buyers due to shipping delays in the latter part of 2020, he said.