Regions See Unique Hay Prices, Supplies

OMAHA (DTN) -- Among Karl Jacobson's chores this week was buying alfalfa hay from a neighbor. The Concordia, Kansas, farmer and cow-calf producer was short of hay this winter for his herd because of the continuing drought affecting parts of the Western Corn Belt (WCB).

"My alfalfa was half of what I normally get," Jacobson said. "My prairie hay was even worse; we didn't even cut some fields."

Once again, drought has limited forage production, which has pushed hay prices high this winter. However, this is not the case in all locations, as some regions saw moisture and good forage production. How much snow and cold the Midwest sees the rest of the winter will have a large effect on what happens to hay prices between now and spring.

RISING HAY PRICES

Hay prices are skyrocketing, according to Dale Leslein, manager of Dyersville, Iowa, Hay Auction. Most of the hay seen now is in the $250- to $300-per-ton range, breaking the record set in 2013.

While northeast Iowa and southwestern Wisconsin saw decent rainfall last growing season, farmers there have limited the amount of forages being grown in the region. Many farmers would rather plant corn than forage crops, so they plowed up their alfalfa acres, he said.

"Because of this, we lack much (hay) volume right now," Leslein said.

Normally only the dairy-quality hay would be bringing top dollar, but with an overall lack of hay supply, all hay is bringing big money. So, both alfalfa and grass hay, top quality and lesser quality, are bringing the same amount, he said.

The cold and snow in mid-January affected the movement of hay more than the price of forage. Leslein said prices didn't climb much, but they did not have a sale last week (Jan. 15-19) since no one could bring hay to the auction.

Dyersville did have a sale Jan. 24 (https://dyersvillesales.com/…). Hay sold at steady prices compared to two weeks ago, according to the report.

DROUGHT AFFECTS HAY PRODUCTION

Paden Lawler, owner of HPL Auctions in Union, Iowa, said the hay shortage has been coming for two years.

"When corn is $6 to $7 per bushel, more corn is raised," Lawler said. "When it goes down to $4 or $5 per bushel, farmers will put some of the fields back to hay here in Iowa."

Lawler said the Midwest hay crop has also been affected by drought conditions.

Most of the cow hay in Iowa is produced in the bottom third of the state. "Some of those guys didn't get a second cutting, and many barely got a first cutting because of the drought," he said.

"And then prices have gone up tremendously. The smaller producers must decide if they can afford to buy hay for their cows or if they should just sell the cows," he said.

Lawler said the per-bale prices for hay at his monthly auction have increased. Premium alfalfa hay, which normally would sell for $120 per 5-foot by 6-foot round bale, is now bringing $200 per bale https://www.highperformancelivestock.com/….

Grass hay bales of the same size normally would be $100 per bale, but now they are bringing $180 per bale. Grinding utility hay would normally bring $40 to $50 per bale and are now worth $75 to $80 per bale.

"Producers have made it through the winter pretty good up until this last winter storm, Lawler said. "Cows probably won't go back out and graze as much after the snow melts, and more hay will have to be fed until spring turn-out."

Jacobson, the Kansas farmer/livestock producer, said that since he was short forage for his cow-calf herd, he had to purchase hay. He paid $235/ton, which he called "kind of pricey."

However, this is what hay is bringing in his north-central Kansas region, he said. His other option was to cull his cow herd at a higher rate. This was something he did not want to do because he has young cows, plus cow prices are relatively good right now.

So, he bought alfalfa hay for his cows.

Jacobson said he is hopeful the 2024 growing season will be better than 2023. The entire 2023 growing season was dry, limiting yields for both the area's wheat crop and for fall crops.

"Irrigated crops were the only crop respectable last year," he said.

Forage shortages is also an issue for producers further south.

Nick Smith knows more about the hay shortage than he'd like. In 2022, he and his father, Nickey, lost the lease on a 500-acre field, 250 acres devoted to hay production and 250 acres to grazing, when a solar farm leased it. Then drought hit.

Normally their Franklinton, Louisiana, cow/calf operation gets 60 inches of rain a year. In 2023, it received only 34 inches. "Summer before last, we put up 1,350 rolls of hay. This past summer, we had 350 rolls."

As a result, Smith said, "In June, we culled heavily and sold 50 cows, anything with bad teeth, bad teats, or open sores. Then we sold 70 replacement heifers."

They used the income from the cows and heifers, as well as their feeder cattle sales, to buy a mixer wagon and truck, concrete troughs and 150 rolls of hay. They mix a roll of dry hay, a roll of baleage and small amounts of feed to stretch the hay.

Even with their reduced numbers of 200 cows, their calves, and 80 replacement heifers, Smith says, "We're cutting it close."

SOME HAVE LOWER HAY PRICES

The situation is considerably different in the northwest corner of Iowa. Paul McGill, owner of Rock Valley, Iowa, Hay Auction, told DTN the hay market there is trending lower.

The most recent sale was Jan. 22, and hay prices were lower than the previous sale (https://www.rockvalleyhay.com/…).

McGill's region did not see many drought issues in 2023, thus the hay supply is good with much available, he said. In addition, most of the Dakotas and even as far away as Montana had ample moisture this growing season.

That means very little of the region's hay is being moved to regions usually facing drought challenges, so most of the hay is remaining in their area, and the supply is ample, he said.

"A lot of areas up here had much better hay production than a year ago," McGill said.

Another factor why the region has ample hay supply was the weather. Before seeing some winter weather around Christmas, the area saw two months of warm and dry weather, he said.

McGill said this let livestock producers continue grazing crop residues and not feed much hay. Those who did begin to feed hay didn't have to adjust rations for cold weather.

These favorable weather conditions also allowed producers to bale corn stalks. There is also an ample supply of these bales due to dry weather seen after harvest, he said.

WEATHER IS KEY

Where hay prices will be this spring will largely depend on the weather, according to McGill. If the wintery conditions continue, this could push prices higher as more hay is fed and there is less supply.

However, hay prices could slide lower if warmer temperatures and drier conditions return, he said.

"I think this is more likely looking at our forecast," McGill said.

Leslein said he believes hay prices in his region will move lower, mainly because they are historically high right now.

Demand should remain fairly strong until June when livestock is turned out on green grass. Prices could remain lofty until the March/April periods, and then prices could fall back with decreasing demand.

"Of course, that depends on how much moisture our area receives between now and then," Leslein said.

UNCERTAIN FUTURE

The future of the Dyersville Hay Auction itself is uncertain.

The auction site land has been sold for development. Auction operators are looking at relocating, but land prices are high. If land can't be found, the owners of the auction might decide to shut down the business, Leslein said.

He said they used to get 1,700 to 2,500 tons of hay at weekly auctions but now most are in the 400- to 500-ton range. The area used to have over 600 dairy farms, but now there are just about 80 farms left.

The demand for hay has decreased dramatically in recent years with less livestock being raised in the area. This trend is not good news for a hay auction, Leslein said.

Jennifer Carrico, DTN Senior Livestock Editor, contributed to this report.

Russ Quinn can be reached at Russ.Quinn@dtn.com.

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