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 A Primedia Property January 3, 2006 |  
Ehay WEEKLY CONTENTS
Hay Market Experts Take A Look At 2006
Events Calendar
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Hay Market Experts Take A Look At 2006
Hay growers are getting more market-savvy as interest in the cash hay market increases, says Dave Petritz, Purdue University ag economist. When taking a look at what 2006 may hold for hay producers, Petritz cites fuel costs as a continuing concern. "The price of fuel caught a lot of attention in the fall, and I think it has driven more interest in local hay auctions," he states. "I think this will continue to be a high-priced energy market. If I were a Great Plains hay grower or dairy producer, I would be concerned about fuel costs." He notes that producers have more labor-efficient hay equipment choices than ever before, and hay equipment is coming in a wider variety of sizes. Petritz is seeing more demand for straw in the Midwest as 2006 kicks off.

How many acres of alfalfa hay will there be in California in 2006? That's the big question, according to Seth Hoyt, statistician with the California field office of the National Agricultural Statistics Service. "Seed industry representatives and industry sources I've talked to are predicting between 5% and 10% more acres than in 2005," Hoyt says. "Nobody I've visited with thinks we will see a repeat of the 15% jump in acres we saw in 2002 because permanent crops have displaced alfalfa hay acres the past three years, with almonds being the bigger one in some areas." Hoyt says the difference in water costs between growing almonds with drip irrigation vs. irrigating alfalfa makes almonds more attractive.

A number of old alfalfa stands will probably be rotated out of production in California during 2006. Hoyt says a recent water deal between the Palo Verde Irrigation District and the Metropolitan Water District of Southern California resulted in a substantial decrease in alfalfa hay acres in the Palo Verde Valley. The total alfalfa acres in the valley slipped to 40,633 as of Dec. 1, 2005, down 9,000 acres from the 2004 figure. Hoyt says this offsets the 9,000 more acres of alfalfa in the Imperial Valley during the same period. "Having said all that, sources indicated that alfalfa hay planting was heavy in some areas of the central and northern valleys," Hoyt reports. "With another substantial drop in upland cotton acres predicted in 2006, some cotton ground will probably be planted to alfalfa hay in the central valley. It has also been reported that some dairies have increased their acres of alfalfa, but much of this may be for green-chop rather than hay." Hoyt say another area to watch is the Sacramento Valley. Processed tomato growers are not coming to terms with processors on contracts for 2006. "Sources indicate that in the coming weeks, some of these growers could plant alfalfa hay if there is an impasse," he says.

Even if alfalfa hay acres in California were up 10% in 2006, the market on early cuttings could still be strong because the pipeline is very low, according to Hoyt. Sources believe hay carryover will be down in spite of higher imports from other states. "The barn-hay market this winter will probably be very bullish," he says. "Many dairies will be in need of hay by late winter and early spring, particularly high-test, milk-cow alfalfa hay." The demand for higher-test alfalfa hay has grown as dairy producers strive to increase milk production. Additionally, dairy cow numbers in California have increased 100,000 head over the past three years. Alfalfa hay growers should find strong demand for early cuttings in 2006.

"Depending on planting and production, the alfalfa hay market could move lower by late spring and summer," Hoyt says. "Some believe the overall alfalfa hay market in California in 2006 will be $10-20/ton below 2005. I wouldn't argue with that. This would still be the second-highest market on record." However, if acres come in above predictions, the market will experience increased downward pressure by summer. Conversely, if acres are lower than expected, Hoyt says the year-to-year market change will be less severe.

"Another thing to watch are milk prices," he states. "Some are predicting a $1-2/cwt drop in milk prices during 2006. If dairy producer margins dip into the negative, demand patterns for alfalfa hay may change. The hay industry discovered from past experience that dairies will get pretty creative in cutting feed costs when they're losing money. One would not expect demand patterns to be altered to the extent we saw in 2003 with $9.25-9.50 milk." Consumer demand for dairy products has improved in recent years. This, combined with positive impacts from the Cooperatives Working Together program to reduce dairy cow numbers, in addition to dairy product exports, has been good for the industry. "When you consider the amount of milk produced in 2005 in the U.S., it is amazing that milk prices are as good as they are," Hoyt says. "But there are caution flags flying for 2006."

He concludes that the alfalfa hay market in California may be strong early in the coming season but could soften by late spring and summer. The amount of decline will depend on alfalfa acres and production the first half of the season, available supplies of alfalfa hay in surrounding states, and profitability in the dairy industry.

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Events
Calendar
**Jan. 7-22 -- National Western Stock Show, National Western Complex, Denver. Learn more at www.nationalwestern.com.

**Jan. 18 -- Tri-State Hay and Pasture Conference, Garret College, McHenry, MD. Call 301-334-6960 for registration information. Learn more at agnr.umd.edu/ForageEvents.

**Jan. 18-19 -- Washington State Hay Growers Association Convention and Trade Show, Three Rivers Convention Center, Kennewick. Learn more at www.wa-hay.org.

**Jan. 19 -- Southern Maryland Hay and Pasture Conference, Isaac Walton League Outdoor Education Center, Waldorf. Call 301-475-4484 or visit agnr.umd.edu/ForageEvents.

**Jan. 19-20 -- Delmarva Hay and Pasture Conference, Delaware State Fairgrounds, Harrington. Contact Richard Taylor at rtaylor@udel.edu or 302-831-1383, or visit agnr.umd.edu/ForageEvents.

**Jan. 19-20 -- Southwest Hay Conference & Trade Show, Ruidoso Convention Center, Ruidoso, NM. Learn more at info@nmhay.com, or call 505-626-5677 or 505-622-8080.

**Jan. 21 -- Winter Grazing of Tall Fescue Pasture Walk, Wye Research and Education Center, Wye Angus Facility, Queenstown, MD. Learn more at agnr.umd.edu/ForageEvents.

**Jan. 23-24 -- Silage for Dairy Farms Conference, Radisson Penn Harris Hotel, Camp Hill, PA. Call 607-255-7654 or visit www.nraes.org.

**Jan. 24 -- Central Maryland Hay and Pasture Conference, Carroll County Agricultural Center, Westminster. Contact Doug Tregoning at dwt@umd.edu, or call 301-590-2809.

**Jan. 25-26 -- Heart of America Grazing Conference, Cave City, KY. Call 270-365-7541 or visit www.uky.edu/ag/forage.

**Jan. 31- Feb. 1 -- Midwest Forage Association 2006 Symposium and Annual Meeting, Stoney Creek Inn, Mosinee, WI. Call MFA at 651-484-3888.

**Feb. 3 -- Northern Indiana Grazing Conference, Shipshewana. Call 260-463-3471, ext. 3.

**Feb. 7-8 -- Nebraska Alfalfa Marketing Association's Mid-America Alfalfa Expo, Kearney. Contact Barb Kinnan at 800-743-1649 or visit www.nebraska-alfalfa.com.

**Feb. 7-9 -- Producing Cash Hay for Virginia's Equine Industry Workshops, Feb. 7-Armory in Chatham; Feb. 8-Southern Piedmont Research Station, Blackstone; Feb. 9-Tidewater Research Station, Suffolk. Registration for each will begin at 8 a.m. and the programs will end at 3:30 p.m. Early registration deadline is Jan. 27. Contact Chris Teutsch at cteutsch@vt.edu, or call 434-0292-5331, ext. 234.

**Feb. 14-16 -- World Ag Expo, Tulare, CA. Learn more at www.worldagexpo.com.

**Feb. 22-23 -- Pennsylvania Hay and Silage Conference, Holiday Inn, Grantville. Contact Lisa Crytser at 814-865-2543.

**Feb. 23 -- Kentucky Alfalfa Conference, Lexington. Contact Garry Lacefield at 270-365-7541, ext. 202.

**Feb. 25 -- Bi-State Forage Institute: Focus on Hay, The Stratford Inn, Harvard, IL. Call 847-223-8627.

**Feb. 27-28 -- Idaho Hay and Forage Association Meeting, Red Lion Canyon Springs Hotel, Twin Falls. Learn more at www.idahohay.com/.

**March 10-14 -- 2006 American Forage and Grassland Council Conference, Westin Riverwalk Hotel, San Antonio, TX. Learn more at www.afgc.org, or call Dana Tucker at 800-944-2342.

**March 14-15 -- Midwest Hay Business Conference and Expo, Ramkota Hotel, Sioux Falls, SD. Sponsored by Hay & Forage Grower.

**April 21-23 -- Midwest Horse Fair, Alliant Energy Center, Madison, WI. Learn more at www.midwesthorsefair.com.

**April 28-30 -- Minnesota Horse Expo, Minnesota State Fairgrounds, St. Paul. Learn more at www.mnhorseexp.org.

**Sept. 7-9 -- National Hay Association 111th Annual Convention, Snow King Resort, Jackson Hole, WY.

**Oct. 3-7 -- World Dairy Expo, Alliant Energy Center, Madison, WI. Learn more at www.worlddairyexpo.com.

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Lora Berg, Editor, eHay Weekly,

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