August 29, 2011

By: Fran Howard

Hay prices in the Midwest have been stable this summer instead of declining seasonally and quality has been reduced in portions of several states, including New York, Ohio and Wisconsin, due to too much rain. “I think we’ll see prices go pretty high this next winter,” says Dan Undersander, hay specialist with the University of Wisconsin – Madison. But the worst of the problems are being felt in the Southern Plains.

Wracked by drought, Texas, Oklahoma and Kansas are in dire need of alfalfa. In Texas alone, the value of hay production has fallen by an estimated $750 million, according to Texas AgriLife Extension Service economists.

Earlier this month, South Dakota Gov. Dennis Daugaard signed an executive order that temporarily eases restrictions, allowing truckers to haul bales of hay to other states without getting state permits for oversized vehicles. The order remains in effect until Oct. 26, but whether imported hay from South Dakota and other states can relieve Southern shortages is uncertain.

“Hay is tight, tight, tight, like we’ve never seen before,” says Steve Hessman, USDA hay reporter for Hay Market News. Dairy-quality hay recently sold in southwestern Kansas for $275 to $280/ton.

Temperatures in Texas, Oklahoma and parts of Kansas have been too high to encourage plant growth on irrigated fields. “The weather has been a nightmare for alfalfa,” Hessman says. “It’s been a year for the record books.”

Dairy-quality alfalfa, Kansas points, is nearly triple the price it was last year when supreme-quality alfalfa sold for $130 to $150/ton and premium brought $120 to $135/ton. “We’re still in the growing season,” Hessman notes. “What are dairies going to do this winter? It’s a scary picture for dairies.”

While lower-quality hay supplies are more ample, Hessman notes that there won’t be any surplus of hay this year, regardless of test. Grinding hay is also bringing record-high prices at $200 to $230/ton, southwestern Kansas. A year ago, grinding hay in the field was selling for $95 to $105/ton, Hessman notes.

In a normal year, Kansas hay growers supply Kansas dairies and feedlots and send alfalfa to Texas and other states. Not this year. Livestock producers in the state are having to ship hay in from elsewhere, including South Dakota.

In Texas, commercial hay growers have had to abandon entire alfalfa fields or portions of their fields to route irrigation water to other crops. “That alfalfa will come back, but that’s not to say it won’t thin down,” says Calvin Trostle, Extension hay specialist with Texas A&M University, Lubbock, Texas.

Longer into next year, the High Plains Underground Water Conservation District 1, which covers the bulk of the state’s hay-growing region, announced plans to reduce irrigation allotments beginning January 2012. Irrigation limits start at 21″ per contiguous acre in January and then steadily fall to 15″ to 16″ in 2015 and 2016, Trostle says. “That will start to put pressure on alfalfa,” he says, as growers turn to less water-intensive crops.

Trostle notes that there are plenty of buyers north of Texas willing to purchase northern supplies of alfalfa, which will reduce the volume of hay supplies that actually reach West Texas and southeastern New Mexico. “There’s a dairy in the southeastern corner of New Mexico that is down to a 27-day supply of silage and hay,” he says. “It’s a crushing situation.”

To compound the problem, corn silage and hay in the Southern Plains is testing high in nitrates, which has added to concerns about both supply tightness and quality.

Hay prices in California are also at record highs or near-record levels due to weather issues and lower inventories heading into the new-crop season. “Prices have been steady to firm all summer,” says Devin Murnin, reporter with USDA’s Hay Market News, Greeley, Colo. “The historical trend is for prices to decrease June to August and then to increase again.”

In August 2008, supreme-quality dairy hay delivered to dairies in the Modesto-Turlock area sold for $260 to $278/ton before dropping in September, according to Murnin. Today, prices on the same quality hay are nearer to $290/ton. “Spring was unusually wet and cold in the Sacramento Valley,” Murnin says. “A lot of first and second cuttings got rained on.” Last year at this time, supreme-quality alfalfa delivered to the Modesto-Turlock area was priced near $190 to $205/ton.

Alfalfa prices are also at or near record highs in Washington and Idaho. At $230 to $250/ton, supreme-quality hay is bringing $50 to $75 more than a year ago. “Yields are down and acres are down,” says Greg Sanders, hay reporter for Dairy Market News, Moses Lake, Wash. “Supplies are below year-earlier levels.”