11-3 IAN Hay and Cows

 There is a very strong tie-in between  the dairy industry and what goes into the mouth of a  dairy cow.  Lots of Idaho  dairy  producers have their eyes on the supply of alfalfa and the cost. Here’s a little market analysis from Knowledge Center Coordinator Matthew Kloes for North West Farm credit services. Hay prices have increased significantly throughout 2011 and last time the hay industry in the Northwest experienced hay price pressure of this magnitude was actually in 2008 when hay production had reached its lowest level in more than a decade and competition for hay between dairy producers and exporters was fierce and today given a predicted decrease in Northwest  alfalfa production and stronger demand compared to 3 years ago the supply situation looks more serious than it did in 2008. Accordingly today’s level of supply and demand should  create a solid floor that supports strong hay prices through the remainder of the year. But it is important to  recognize that there are a number of risks in the outlook based on lessons learned in 2008. Tight supplies were not enough to sustain hay prices in the wake of the global economic downturn and declining milk prices 3 years ago and today’s market is faced with a  fragile global economic situation and an environment of weakening milk prices. In 2008 the demand for alfalfa dried up with the downturn in the global economy and sharp downturn in the exports of US dairy products. Milk prices fell but large inventories of expensive feed locked dairies into a higher cost of production.