Hay Prices Continue to Rise

OMAHA (DTN) -- For Casey Cooksley, who farms and raises cattle near Broken Bow, Nebraska, the impact of heat and dryness on forage this summer is evident around him.

He knows people in his area of central Nebraska who have half the forage production of last year because of drought. In his own operation, some of his alfalfa is irrigated, but even then, less production is expected with the extremely dry conditions.

Cooksley and other cattle producers are making some tough decisions since depending on their cow herd size, some producers might not have enough hay. Cooksley said many cattle producers will use alternative sources for protein this winter. Many chopped silage early just to get something of value out of their drought-damaged crop.

"A lot of what was chopped for silage didn't have much for corn in it, as it was dryland and burning up fairly quickly in the 100-degree temperatures," Cooksley told DTN.

EXTREMELY DRY GROWING SEASON

It has been an extremely dry growing season in the region where the Western Corn Belt (WCB) becomes the High Plains. Drought is present all the way from the Dakotas south through Texas. The latest U.S. Drought Monitor released Sept. 15 (https://droughtmonitor.unl.edu/…) shows D4 drought (exceptional drought) is found in northeast and southwest Nebraska, northwest and southwest Kansas, southwestern Oklahoma and in several pockets in west Texas. The entire states of Nebraska and Oklahoma are covered in different drought designations.

DTN Ag Meteorologist Bryce Anderson recently wrote how the drought and record-high temperatures in the Western Corn Belt is the worst since 2012 and has even led to the Platte River to be completely dry in parts of Nebraska. (https://www.dtnpf.com/…)

This has created a tough situation for cow-calf producers in the region as grass pastures/rangeland produced limited forage this growing season without rain. The drought's impact will linger this fall and into winter as producers have less forage to feed.

HIGHER HAY PRICES

This has caused hay prices to be considerably higher than last year. Cattle producers have difficult choices ahead -- buy expensive feedstuffs, find alternative feeds or cull some of their herds to limit feeding costs.

Livestock producers might consider buying hay to feed their livestock if they are short on forage. Cooksley said most forage prices have increased in his location around $40 to $50/ton.

Paul McGill, owner and manager of Rock Valley Hay Auction located in Rock Valley, Iowa, said his normal hay buyers have been "very aggressive" purchasing hay this summer.

This added demand has pushed forage prices upward. Despite this, buyers are hedging against even higher forage prices possible this winter -- especially if the winter weather is tough -- and they're buying the hay now to stockpile enough to meet their winter needs, McGill explained. (See the winter weather forecast and its possible La Nina impact at https://www.dtnpf.com/….)

In the auction's latest sale on Sept. 8 (https://www.rockvalleyhay.com/…), alfalfa prices ranged from $215/ton to $300/ton with the mean being around $250/ton. Grass hay sold from $80/ton to $230/ton with the middle being around $165/ton.

LIMITED HAY PRODUCTION

Alfalfa production in most of the High Plains is predicted to see slight increases from 2021 levels, except for Nebraska and Texas (https://www.nass.usda.gov/…). Those two states expect a significant decline in both yield and alfalfa production compared to the last two growing seasons.

The drought has limited forage production particularly hard in Nebraska. A University of Nebraska-Lincoln (UNL) Extension report predicted forage production to be considerably less during the 2022 growing season because of dry fields (https://beef.unl.edu/…).

Nebraska's 2022 hay production was estimated at 4.83 million tons, down 23.2% compared to the 2021 growing season. Total hay supply in 2022 is forecast to be 6.08 million tons, which is 16.6% lower than last year.

McGill said hay production in his region has been affected by the dry weather. Located in the northwest corner of Iowa, his business also covers parts of southeastern South Dakota and northeastern Nebraska.

In 2021, hay production was short early, and then late-season rains provided some relief. It is the opposite in 2022 with good production for first-cut alfalfa, and then later cuts were limited because of lack of moisture, he said.

The key to forage prices going forward is how bad the weather is this winter, McGill said.

"I get asked this a lot," McGill said. "If we have another mild winter, prices could stay pretty steady, but if we see a bad winter with lots of cold and wet weather, then we could see prices move higher."

Some cattle producers may buy distillers products to fill the gap to feed their cattle. However, the feedstuffs are expensive: They are byproducts from corn, and transportation costs have increased with higher diesel costs, McGill said.

HAY MARKET CHANGING

McGill said the hay market has really changed in recent years.

Twenty years ago, it was more of a seasonal market with the fall harvest time being a slow time for selling hay. Now, hay is being sold all year long with November being his busiest month, he said.

McGill said livestock producers will turn to alternative feed sources if alfalfa and grass hay prices continue to rise. This would include crop residues, CRP hay and straw.

Northwest Iowa is home to large poultry operations, which use corn stalk bales in their operations. With the bird population cut this spring due to avian bird flu concerns, there was a large supply of corn stalk bales this spring, he said.

Now, just a few months later, corn stalk bales are in short supply, McGill added. Corn stalk bales at the latest auction at Rock Valley brought in a range from $85 to $95/ton.

"With the drought affecting the crops around here, the corn plants are not as tall as they normally are, which could limit the amount of bales we could see this fall," he said.

Livestock producers have also turned to purchasing CRP hay. This forage is of lower quality but is also cheaper. Many producers will use this hay as grinding hay. These prices have ranged from $70 to $180/ton, McGill said.

CULLING COW CONSIDERATIONS

Cooksley said he figures cattle producers have already culled their herds or will cull some head this fall to save on feed costs. Many cows will be pregnancy-checked this fall to help decide which cows get culled.

With cattle prices being decent, some producers may also change their calf feeding plans, he said.

"Calves have been bringing good money also, so some are considering selling them off instead of backgrounding them," he said.

For a DTN story on maxing out cull values this fall, see https://www.dtnpf.com/….

UNL Extension issued a report in August detailing some of the important considerations when culling cows. For more on strategic culling, go to https://beef.unl.edu/….

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

Follow him on Twitter @RussQuinnDTN

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