Hay Prices Surpisingly Stay At High Levels | Hay & Forage Grower

Hay Prices Surpisingly Stay At High Levels

Hay-acreage decrease, inflation may be causes, economist says
Jul 15, 2014 Jeff Holmquist

Hay prices have remained strong during the first part of 2014 despite decent carryover stocks and adequate production, according to Matt Diersen, ag economist with South Dakota State University.

“I’m surprised hay prices are as high as they are,” he says.

One reason for the price stability is the slight decrease in U.S. hay acres planted in 2014. USDA’s June Acreage report estimated that 57.6 million hay acres will be harvested this year, down from 58.3 million harvested acres last year.

“Fewer acres to be harvested across the country means what’s out there you have to fight over,” Diersen says.

The other contributing factor is the inflation seen across the entire ag sector.

“The price level for all farm goods is higher than it was a year ago, even taking lower corn prices into account. That’s probably given hay a 5-10% price boost.”

As a result, prices remain similar to last year’s levels, even though declining prices might be expected as the new crop rolls in, he says.

Hay producers across the country will continue to see prices influenced by California dairies and exporters having to find hay in other states due to the continuing drought in the Southwest and West. A favorable early hay crop in the Pacific Northwest could help deal with supply needs further south, he says.

“How that’s going to play out, I’m not sure,” Diersen says. “Eventually, they may need to draw hay from this part of the country (the Midwest). But I think there’s going to be a bit more production in this part of the country to meet those needs.”

Growers across the U.S. are experiencing a mixed bag when it comes to the hay supply and quality. Here are what two growers and another economist say is happening in their areas so far this year.

Persistent rains have lowered hay quality in Illinois and the Upper Midwest, says Don Brown, Jr., a hay producer and dealer in Davis, IL.

“We just had our county fair and everybody was asking what the haymaking situation was,” he says. “I told them it’s like religion … you get to make hay one day a week. It’s pretty depressing.”

He’s not alone in his misery, Brown adds. “I’ve talked to people in South Dakota, Kansas and Wisconsin. We’re all battling the same thing.”

But Brown was fortunate to have quality carryover stock from last winter, when he had back surgery and stopped marketing crop. Now that he’s back on his feet and three weeks of continuous rain had damaged the current crop, calls are pouring in.

“People are looking for good, dry hay,” he says. “I sold a lot of last year’s inventory during the month of June. I still have a little bit left.”

Prices held at last year’s levels, Brown reports, with good-quality dairy hay at $250/ton and beef-cattle feed at $100/ton. He sells alfalfa, alfalfa-grass and straight-grass hay in 3 x 3 x 8’ bales to dairies, beef operations and horse owners across Illinois, Wisconsin and Iowa.

His 200 acres of new-crop hay, says the former president of the Illinois Forage and Grassland Council, has been a challenge. “I have 40 acres of hay on the ground all the time, so I ruined a lot,” he admits.

“But we started cutting second-crop alfalfa July 8, and it looks good. I just hope the weather holds.”

The early hay season has been poor in many parts of Oklahoma, says Brandon Drinnon, a hay grower in Taloga.

“It started off so dry, and we all started holding our heads down,” he says. “We just thought we were in for another dry year all the way around.”

Some dryland growers didn’t take a first cut, while irrigated farms fared a bit better, he reports.

“We’ve missed at least one cut, and some people have lost two. A lot of times we get two-thirds of our crop on first cutting, but we obviously didn’t get that this year.”

Some timely rain in June, however, improved prospects for a decent year.

“We are all glad to get what we’re getting,” he says. “We do remember last year when we didn’t get anything.”

Growers don’t have much supply on hand, so prices remain strong in the Central Plains, Drinnon says. Dry-cow hay fetches $140/ton while good-quality dairy hay remains at $240/ton. The prices are very similar to last year’s at this time.

“We’re not going to have an abundance of hay for a long time,” the grower concludes. “But we will have some hay to move this year.”

He puts up alfalfa hay in 3 x 4 x 8’ and 4 x 4 x 8’ bales on 200 dryland acres and sells to dairies in New Mexico and Texas. Drinnon also buys hay for resale from growers in Oklahoma, Kansas and Nebraska.

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Overall, hay supply and quality in the Southeast and along the East Coast have been good this year, according to Curtis Lacy, ag economist with the University of Georgia.

Recent dry weather helped growers at first cutting, Lacy reports, but now much of the Southeast could use a shot of rain again.

“We did have a lot of rain early in the year, so we had a lot of growth. But it has been dry here the last several weeks,” he says. “If we actually get some rain in the next few days or weeks, we’ll be in pretty good shape. People will be well on their way to second cutting.”

Hay prices are stable in Georgia and the surrounding region, Lacy says, and he doesn’t expect them to shift much in coming months.

Reach Dierson at 605-688-4864 or matthew.diersen@sdstate.edu[2], Brown at 815-238-8372 or don.brownjr@yahoo.com[3], Drinnon at 580-334-8960 or drinnonhay@hotmail.com[4], or Lacy at 229-386-3512 or clacy@uga.edu[5].