Buy or Cry? Don’t panic about hay prices quite yet
July 11, 2018
That's the question on many producers' minds these days as they begin stockpiling winter forages.
While much of the Black Hills and Eastern South Dakota have received ample moisture this summer making for ideal growing conditions, the persistent moisture and humidity is dampening hay quality in the region.
According to the most recent USDA AMN South Dakota Weekly Hay Summary, "The challenges faced by hay growers in East River this season to put up dry hay continued again this week. Showers and poor curing conditions, through midweek, made it very difficult if not impossible to put up high quality hay. The humidity and threat of showers finally left the area on Thursday which opened a window producers needed to get their second cutting of alfalfa started. A large amount of first cutting alfalfa and grass hay was put up under very poor curing conditions and second cutting was delayed due to persistent rains."
Zane Williams, of Williams Hay and Cattle in Irene, S.D., says his ranch has received 14.8 inches of rain since the end of May combined with additional moisture from the heavy snowfall they received during the late April snow storms.
“Production is behind schedule because of the great moisture we have received. As a result, there has been some early panic buying, mostly for premium hay shipping to Colorado or points south and east. We were trucking a lot of hay to ranchers early in the season the last couple of years, but this year, the phone has been very quiet on that front so far. Of course, producers are trying to hold hay prices up, but my gut says prices will definitely soften when all of the dry land hay starts hitting the market.” Same Hales, Evansville Wyo.
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"Everything was about two weeks behind from the get-go," said Williams, who harvests 450 acres of hay annually, primarily to sell in the dairy market. "The corn looks fantastic where it isn't drowned out. Alfalfa was also delayed some, but our first cutting was very good quality and made over 2 ton on our best fields although we did have a field with early weevil problems that took the quality down a lot. Dairy hay is up $20/ton from last year, and feedlot hay is probably $15/ton higher right now."
In contrast, haying is in full swing in western South Dakota with hot and dry conditions in the forecast. While the majority of South Dakota has found relief from the severe drought experienced over the past two years, there are still ranchers who are feeling the effects of drought-like conditions.
The USDA Hay Summary reports, "Drought conditions have improved, but there still is a large pocket of moderate to severe drought around the Huron and Aberdeen area. The severe drought in West River has improved with only an area of D0 drought (abnormally dry) in the northwest corner of the state."
"In our area, the hay is thin like it was last year," said Lance Perrion, of Perrion Farms in Ipswich, S.D. "You only have to go about 30 miles away though, and there's plenty of hay. We sell a couple thousand bales every year, with a fair amount headed West River. This year, there's been lots of rain that way, so there isn't the hay demand right now that we've had in previous years."
Further west, Sam Hales of Hales Hay Bales in Evansville,Wyo., puts up irrigated hay, so production doesn't vary much from year to year; however, he says from what he's seen, most of eastern and northern Wyoming, as well as central and western South Dakota are in much better shape than the last couple of years, thanks to timely rains.
"Production is behind schedule because of the great moisture we have received," Hales said. "As a result, there has been some early panic buying, mostly for premium hay shipping to Colorado or points south and east. We were trucking a lot of hay to ranchers early in the season the last couple of years, but this year, the phone has been very quiet on that front so far. Of course, producers are trying to hold hay prices up, but my gut says prices will definitely soften when all of the dry land hay starts hitting the market."
Hales says early pricing for premium hay has been all over the board, with some hay listed at $150-170/ton earlier in the season that has now dropped to $140/ton. Meanwhile, he's seen pricing for early dry land hay out of South Dakota at $115-125/ton.
"I just can't see prices remaining this strong unless the dry country in southern Colorado and Kansas decides they can justify the trucking expenses," Hales said.
Just as much of the region finds drought relief, moving south, dry conditions will put some pressure on hay prices, says Thorpe Thompson, a broker for the High Plains Hay Exchange in Torrington, Wyo.
"A lot of people are thinking this will be a repeat year from 2012 when hay jumped to $300/ton; however, the big difference is cattle markets and commodities were good then, and there isn't extra money out there this time around, so I don't anticipate that happening this year," said Thompson, who moves hay all across the United States. "Southern and western Colorado, Texas, Oklahoma, southern Kansas, New Mexico and Utah are extremely dry, and that is really going to pull on our market. I talked to a guy in Texas last week who said hay was priced at $250-275 in that area."
A few factors could come into play, he says, that could change conditions in the south.
"The monsoon season is just getting started, so southern moisture is moving up," Thompson said. "In Colorado along the Arkansas River, they had a tremendous amount of winter kill on their alfalfa. They've since gone in and planted forage crops — oats, hay, peas, sorghum and millet — for cow feed, but they are running out of water (calling for less than 20 percent of water right now). This monsoon season will be critical in determining how much hay they'll need down there. Additionally, bankers I've visited with have indicated that producers there are in tough shape. Those guys are going to need to make a choice. If they want to buy hay, they will need to reduce their cow numbers to have money to buy hay with. It just depends on how good of a base these ranchers have, but that's certainly a factor, as well."
In the immediate area, he says, there will be an abundance and prices will depend on the quality. Thompson is seeing round bales priced at $110-130/ton and square bales at $130-150/ton in the Scottsbluff and Torrington area. Moving to Central South Dakota, hay has been listed at $80-110/ton.
"There's going to be a tremendous amount of cow hay, as well as oats, millet and sorghum," Thompson said. "That's going to relieve the cow market hay some. My advice to producers looking to buy hay is to price around. Move out of your typical coffee shop area and check around. Some hay is overpriced. I can go 300 miles east of Scottsbluff and deliver hay back to the Torrington/Scottsbluff area cheaper than buying it close."
In addition to price checking, knowing the hay quality before buying is critical.
"Know your hay," he said. "There has been a lot of hay that's been rained on and a lot of noxious weeds this year. Leafy spurge and poison hemlock have come on really strong, so there's going to be a lot of junk hauled around. These are things to be aware of. Don't forget if you're buying grain hays to test for nitrates."
Thompson says buyers and sellers can reduce risk by working with a hay broker or getting a bank reference with each transaction.
"I spend half my time on the phone with bankers," he said. "Everything I do is through Torrington Livestock; we are bonded. With each check, we do a lien search on every person that we do business with, and for buyers, we always require a bank reference." F