Strong Demand Supports Hay Prices

Regional variations in supply and quality are the biggest determinants of value as winter ends.

The hay market is seeing strong demand, which is keeping prices high. Regionally, forage prices vary due to differences in supply and availability, Image courtesy of Kim Summers

Kim Summers is not hoping for a repeat of 2018 as she looks to forage production this year. Near-constant rains severely limited the amount of hay she and husband, Mark Brunk, were able to sell from their Pennsylvania farm last season.

“We had over 70 inches of precipitation in 2018,” Summers recalls, noting annual rainfall is usually around 40 inches. “Normally, we get five to six cuttings. Last year, we only got two cuttings.”

Hay prices continue to reflect tight supplies, climbing in light of rising demand--especially this time of the year, right before livestock are able to graze again. According to the National Weather Service (NWS) in State College, Pennsylvania, most of that state saw increased precipitation in 2018. The amount above normal ranged from 11 to 25% in the northern part of the state to 51 to 75% in the south. A couple of counties in this area saw greater than 75% above-normal precipitation, NWS reports.

DTN senior ag meteorologist Bryce Anderson notes the northeastern part of the U.S. “was off the charts” on precipitation last year. Pennsylvania, for instance, was from three to five standard deviations above the 1977-2017 average, which, statistically speaking, is extreme precipitation, he says.

The forecast this spring calls for more precipitation for both the Northeast and the Corn Belt. A weak El Niño warm-sea surface-temperature pattern was in effect in the Pacific Ocean the first of the year, and, it’s likely to stay through early spring. Anderson says El Niño occurrences usually lead to above-normal precipitation.

EAST COAST SUPPLIES LIMITED

Hay farmer Summers says increased moisture limited her forage production in 2018 to only about 100,000 small square bales. The farm usually is closer to 400,000 bales of production.

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In addition to less quantity, quality was an issue. The wet weather did not allow time to dry hay, much less put it up properly. There was never a window of more than a day or two without rain.

Summers, known on social media as the “Hay Lady in PA,” says hay supplies from the East Coast are limited moving into the spring. By January, she had already sold all of her alfalfa hay, as well as orchardgrass hay. She still had some mixed grass hay forage left in stock at press time, but it wasn’t expected to last.

Summers says her family’s hay is sold locally and along the East Coast, from Massachusetts to the Carolinas. They also ship hay, sometimes as far away as Texas, and they produce both small and large square bales.

“Normally, March, April and May are our big months for selling hay, but, this year, it got bumped up some,” she says. “We could sell hay everyday if we had it.”

Prices for hay have risen steadily in recent years as the economics of hay production has forced producers to ask more for their forages. The days of $2- to $3-per-bale small square bales are long gone.

The “Pennsylvania Weekly Hay Report” from USDA Ag Market News, in New Holland, reported alfalfa hay prices for southern Pennsylvania the week ending Jan. 11, 2019, at $205 to $260 per ton. In that same January 2019 report, alfalfa/grass hay ranged from $115 to $460 per ton, and grass hay (timothy/orchard) from $120 to $375 per ton.

CORN BELT YIELD BUMPS

Forage production was less affected by increased precipitation in the Corn Belt. Jim Brown, who raises forages near Lebanon, Indiana, says 2018 was a pretty good year in his region for hay. While it was a little wet in the fall, he managed to get five cuttings with decent yields.

“We had higher yields as I started to use some different alfalfa seed, so, I saw about a ton-per-acre increase in yields in some of my fields,” Brown says.

All of his hay is put up in small square bales and sold to local customers in the area just outside of Indianapolis. With limited cattle numbers in the state, most of his customers own horses or small ruminants. Brown adds demand for forage in his area is strong, and, he had already sold all of his 2018 hay by January 2019. A good economy is key for his forage market, he notes. His customers stop buying hay in a downturn, which last occurred in 2008.

Alfalfa hay in small square bales is selling at around $6 per bale here, with some reports of as much as $7 per bale, he says. The per-bale price for which he sold his orchardgrass was $5.

“Prices are pretty stable in our area,” he explains. “From talking to different folks, there appears to be a decent supply of hay out there.”

Farther to the west, hay supplies appear to be slightly better and, thus, prices are lower.

The USDA “Nebraska Hay Summary” for the week ending Jan. 11, 2019, reported alfalfa and grass hay sold fully steady. Prices for alfalfa are ranging from $72.50 to $180 per ton. Grass has ranged from $65 to $170 per ton.

“If there is a large accumulation of moisture, cattlemen will have to start supplementing feed again, and, that will dwindle supplies of reserve hay,” the report states. “It appears most potential buyers will procure hay on an as-needed basis, not stockpiling large quantities.”

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