Limited Hay Supplies Elevate Prices

OMAHA (DTN) -- Hay prices, along with supply and demand, remain regional in nature, according to hay growers and sellers. Some areas have a good supply of hay and thus prices are lower, while other locales are short of hay and prices have climbed significantly higher.

The key to where hay prices go in the next growing season will be how much moisture is seen in forage growing regions. Adequate moisture would increase supplies and lower prices while another drought will keep prices high and might climb even higher.

HIGH HAY PRICES CONTINUE

Kim Summers, a hay producer from Chambersburg, Pennsylvania, told DTN she expects her hay prices to continue at their current levels. Short of large increases in fertilizer and fuel prices this spring, no notable price changes are expected.

Summers' hay is sold in small square bales and many of her customers are horse owners along the East Coast. On a per ton basis, her average hay price is about $300. Grass hay will run around $7.50 per bale while alfalfa hay will top out around $10 to $12 per bale, she said.

Summers, known on social media as Hay Lady in PA, has some hay available but said the market is tightening up as we move toward grazing season. She tries to keep some hay to the end of the hay feeding season to continue to serve her customers.

The growing season in Pennsylvania was dry last year, which limited production a bit. The winter was also dry with very little snow, she said.

"If we can get some adequate rains this spring, I think we could still be alright," Summers said. "The first cutting of alfalfa could be short but some grasses like Timothy won't be cut until June, so we do have some time to catch some rains."

SOME HAVE FORAGE

Further west in northeastern Iowa, the hay market is completely different. Dale Leslein, manager of the Dyersville Hay Auction in Dyersville, Iowa, said they currently have a glut of hay. In turn, hay prices are "reasonable" in the region.

The area saw timely rains last growing season, which increased forage production in the region. This winter and spring have also seen much moisture, he said.

This additional production has limited the price of all types of hay at the auction, he said.

Leslein said alfalfa hay in large square bales topped out at $275 per ton, but most of the hay sold in a range of $180 to $220 per ton. Grass hay had a high of $180 per ton, but most of the hay is now in a range of $120 to $130 per ton.

Another reason for the plentiful supply of hay is the area has lost much hay demand in recent years as aging farmers have gotten out of the livestock business, especially dairy farmers. Low milk prices have also spurred the exodus from milking cows, he said.

Leslein said he had an auctioneer friend who had 19 dairy sales in just 31 days in the month of March in Wisconsin. Some of these operations selling out were 5,000 cow dairies, he said.

"Alfalfa acres in our area are falling considerably," Leslein said. "With corn at $6.50 a bushel and soybeans at $15.00 (a bushel), guys are planting these crops instead of alfalfa."

DROUGHT LIMITS SUPPLY

Across the Hawkeye state to the west, the hay situation is completely different.

Paul McGill, owner/manager of Rock Valley Hay Auction in Rock Valley, Iowa, told DTN the severe drought just to the west of their area has had a huge effect on the hay market in their area. Production was less because of the dry conditions, thus increasing forage demand, he said.

Much of their supply is coming from northern areas, as far north as Manitoba, Canada, where moisture last growing season was ample. While supply is generally meeting demand, the market is strong.

"Supply has been really good for the last few weeks, although fieldwork is starting now," McGill said.

McGill said alfalfa has sold in a range of $210 to $260 per ton in recent weeks. Grass hay, meanwhile, has sold in a much wider range as low, grassy areas were harvested but these forages are of a lower quality. Lesser-quality hay has sold around $130 per ton, grinding grass around $175 per ton to $200 per ton and good grass hay $230 per ton, down from $250 per ton months ago.

McGill said corn stalks were at near-record-high prices this winter. The forage has sold for $110 per ton to $135 per ton, up from $80 per ton to $95 per ton last year.

Demand has increased for the forage because of the cold conditions this winter as many producers used the bales for windbreaks and didn't want to feed these temporary structures. Some corn stalk bales were also damaged from being frozen to the ground in wintry weather, he said.

MOISTURE MATTERS

The outlook for the hay market depends on how much moisture falls this growing season in hay growing regions. More moisture would push production levels higher and hay prices could decline some. However, continued production issues could keep forage prices high.

When asked if prices could climb even higher, Summers said there is a point where hay buyers cannot afford to purchase hay. Buyers are already trying to find alternatives to expensive hay, often at the expense of their animals, she said.

"If it doesn't rain, there could be more high prices," said Summers, who estimated another dollar could be added to cost of her hay.

McGill agreed if rains were to return to drought-ravaged areas the hay prices could return to more historical levels. High hay prices make it difficult for livestock producers to maintain break-evens, he said.

The weather in the next three weeks could go a long way toward determining which direction the hay market ultimately moves this growing season. Areas with dry conditions will need moisture to increase forage production, he said.

"Every year is different, I guess we will see," McGill said.

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

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