June 29, 2016

2016 Acreage Preview: Alfalfa Acres Expected to Slip This Year

 |  By: Anna-Lisa Laca

As USDA’s Acreage Report comes out on Thursday, many livestock producers are looking to the hay report in hopes of keeping their feed costs low this year.

In 2016, farmers expect to harvest 54.305 million acres of hay, according to the March Prospective Plantings report. That figure will be updated in Thursday's USDA data release.  

The June report will likely show a reduction in hay acres which will heavily impact the price of good quality alfalfa hay. That’s good news for hay producers, but bad news for dairy farmers.

What’s going on? According to analysts, there are two main factors driving hay acres down: failed seedings and low alfalfa prices.

Failed Seedings

Producers in the Midwest and Northeast struggled to get new seedings to grow, according to Dan Undersander, forage specialist with the University of Wisconsin Madison. “A significant amount of the seeded acreage came up and then we had a long period of really cool weather,” he explains. “During that time, a lot of new stands thinned or died.”

He estimates that at least 15% of the stands seeded this spring turned out to be poor or failed. “It’s not a disaster, but it is a significant amount,” Undersander  says. “Final acreage will be down.”

Lower Alfalfa Prices

Likewise, Seth Hoyt, a veteran hay market analyst with the Hoyt Report, says early indications point to lower alfalfa hay acres in the West this year. “While this is being driven by lower alfalfa hay prices, the depressed prices on middle- to lower-quality hay is the big factor,” he says. Some growers out West, where there are other crop options, are taking out old stands of alfalfa after one or two cuttings to put in other crops, according to Hoyt. Because of this situation, he says USDA numbers won’t show the full decline in acres because USDA counts harvested acres even if there was only one cutting.

James Johanson, hay statistician with USDA’s National Agriculture Statistics Service, agrees there are limitations in USDA’s numbers.

“If you cut the field for dry hay at any point in the 2016 calendar year, then it should be counted as harvested acres of alfalfa,” Johanson says. “If you have a 100-acre field of alfalfa, (whether)you can cut it once or you can cut it five times, it should still be counted as 100 acres of harvested alfalfa hay.”

Johanson adds that the USDA report is not intended to forecast yield, but only harvested acres. Still most analysts look to this report as a tool to aid price prediction.

Hay Quality

Other factors are also affecting hay acres and hay production in 2016.

In Southern California, for example, farmers are taking their alfalfa acres out of hay production and putting them into alfalfa seed production. As a result, seed acres there are up 48% compared to one year ago, according to Hoyt.

He expects those lower acres will affect higher-quality hay more than lower-quality hay.

Elsewhere in the country, hay quality will also be worth watching. Undersander says the first two cuttings across most of the Midwest and Northeast were a struggle to put up because of the weather. “A lot of the hay acres are not good quality,” he says. “They had trouble working around the rain.”

Overall, Undersander and Hoyt agree that the reduction in harvested acres and the abundance of poor quality hay mean that farmers should expect to see a large gap between the prices of good quality hay and lower quality hay again this year. 

Read more pre-report analysis of the USDA Acreage Report at www.agweb.com.