Drought, dwindling supplies push hay prices up

Tuesday, June 12, 2012 | 4:57 p.m. CDT; updated 9:04 p.m. CDT, Tuesday, June 12, 2012

COLUMBIA — Hay prices have soared this year, thanks to a prolonged drought and farmers switching to more profitable plantings of corn and soybeans.

May’s average prices per ton of dry hay came to $111, according to the National Agriculture Statistics Service, up from $88 a year ago, and $71 in 2010.

Alfalfa, a more nutritious feed, gets better prices and has jumped even higher in the last two years, climbing to $190 per ton this May, up from $125 per ton in May 2010.

Whitney Wiegal, an agriculture business specialist with the University of Missouri Extension, cites shrinking supplies.

“A couple years ago, it was a little bit easier to come up with hay,” he said. “It’s as high as I’ve ever seen.”

Wiegal attributes much of this to drought conditions, not only in Missouri but also last year’s severe droughts in Oklahoma and Texas. Since hay is what Wiegal calls a “bulky commodity,” meaning it's expensive to transport, buyers typically look to local sources for hay.

But with hay crops and grazing land suffering after drought plagued Texas and Oklahoma, buyers, last year, looked outside their home states for hay, including Missouri. Missouri exported a significant portion of hay to those two states, which contributed to increased prices within the state last year.

Charles Buckner, a cattle farmer in Fair Grove, Mo., said he feels the pinch, as hay and other input costs rise, while his sale prices  fall.

“It’s cost us a lot. Dairy is down a bunch. Milk is way down,” he said. Buckner gets most of his hay from about five sellers centered mostly in northern Missouri. “I buy a lot, feed a lot of cattle.”

Last year, Buckner saw prices nearly double. He hasn’t started buying hay feed this year, but he expects prices to be high as well.

Dry weather is already having an effect on prices this summer. The June 8 “Weekly Hay Summary” published by the Missouri Department of Agriculture noted that, “The storyline dominating all of Missouri agriculture this week is the need for rain.”

Most of Missouri has been abnormally dry this year, with some areas in southeast Missouri experiencing moderate and even severe drought.

“Hay producers are generally seeing lower yields than expected, some losing as much as 50 percent,” the report noted. While demand is good to moderate, supply is light to moderate — and “prices are firm.”

Drought isn’t the end of the story, though. Growing hay isn’t typically a profitable enterprise, Wiegal said, but prices for corn and soy are very robust.

“Pretty much anything that can go to corn and beans will go to corn and beans,” he said.

The land left for growing hay is generally too steep, too rocky or has too much clay to grow soy or corn. With the weather still dry and corn and soy prices still high, the pressure on hay supplies aren’t likely to subside anytime soon.

“It looks to me like hay prices will stay high through the summer,” Wiegal said.

Ben Unglesbee is a reporter for Missouri Business Alert, a digital website that will be launched this fall.

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