High-quality hay in short supply because of weather
By Jean Caspers-Simmet
Date Modified: 07/08/2013 2:42 PM
WAUKON, Iowa — University of Nebraska Extension forage specialist Bruce Anderson said he can't price hay any better than the people sitting next to each other at last week's Lunch and Learn event at the Farm Progress Hay Expo.
However, he could talk about factors that influence hay prices.
Anderson's talk on hay marketing was a new feature at the show.
"Obviously, there is a supply and demand situation that exists, but in the hay business, the people who are buying that hay have other alternatives that they can be feeding," Anderson said. "The way those commodities are priced and how they are available can influence hay prices."
The thing that has most affected hay prices in recent years is corn.
"Most people who are feeding hay can shift some of their ration over to more corn if the corn price goes down," Anderson said. "They can substitute corn byproducts in a number of rations. They can chop corn silage and feed that as roughage in place of alfalfa hay. Corn plays a big role in terms of what hay price will be and can often be an indicator of what direction hay price is heading. If corn prices go down, in a few months we're going to see downward pressure on hay prices. If corn prices go up we might see all commodities rise."
For the short term, hay prices will stay historically high, Anderson said.
"We know supply is down, carryover was at near record lows, acres have been dropping and we will see a supply squeeze and high prices," Anderson said. "If you need to buy hay, it may well be to your advantage to identify where that hay is going to come from. If you're selling hay, you know that you can be fairly firm with your prices, that folks will not have a lot of negotiating room."
Ultimately, Anderson said, hay value will be equal to what one person is willing to buy it for and another person is willing to sell it for.
"It's what those two can agree on," Anderson said. "If both are satisfied once the hay has been sold and fed, it's a good transaction for both parties and they can do business again. That's what we're trying to accomplish with any hay marketing program."
A good place to stay current with hay prices is USDA's Agricultural Marketing Service Market News website. It documents definite hay sales, Anderson said.
"Around here (northeast Iowa) there has been hay sold at auction recently up in the $400 per ton range," Anderson said. "Up at that level, that is probably more like panic buying. A lot of us were just hanging on with our hay through the winter and were counting on certain timing of when that first cutting was going to come in and the quality we were looking for. With the spring we've had with delays and quality of what's been coming off not what we hoped for, there is a near-term shortage of high quality material. It's been like that all the way from eastern Nebraska through the entire Corn Belt."
The challenge with first cut is often an indicator that things may not be real good for the rest of the season as far as tonnage, Anderson said. A lot of small grains didn't develop as expected.
"Animals have to eat every day and when hay is in real short supply you end up paying more than probably it's worth nutritionally but it's something you have to have," Anderson said.