Michigan hay markets beginning to show signs of price relief

After record-setting prices in the winter of 2013, hay prices in Michigan are showing some signs of softening.

The Michigan hay markets are beginning to show signs of price relief for buyers from the drought-driven high prices of 2012-2013. Rainfall has returned across much of Michigan and hay yields have rebounded on the first cutting harvest.

Even so, prices have not fallen to pre-2012 levels. There are a number of reasons for this very slow decline including:

  1. The total carry-over supply of hay coming out of the winter was the lowest in the last fifty years as most hay barns were empty
  2. Hay acres are also at the lowest levels in recent times as many sod fields have been planted to row crops because of the high market prices for these grain crops  
  3. Poor hay baling weather this June because of the abundant rainfall caused some hay intended for baling to be chopped
  4. Reports from Wisconsin and Minnesota of severe winter kill of their alfalfa fields which will place some demand on Michigan hay 
  5. Alternative feeds prices, including the grains crops, are staying relatively high so there are few cheaper sources of feed to switch to

Still yields on first cutting, the biggest cutting of the season, have returned to near normal levels. Dairy quality alfalfa hays that were harvested in early June were slightly below normal. Some alfalfa fields were thinned by winter kill, but nothing as serious as the farms in Wisconsin and Minnesota. Even with this thinning, abundant soil moisture kept these yields near normal. Later-harvested first cutting hay intended for beef cattle and other livestock actually received some significant rainfall in June across much of the state and the yields of those alfalfa and alfalfa/grass mixed hays jumped significantly in yield.

In 2012, there was not a pronounced price difference between high-quality alfalfa hays and low-quality grass hays. They all were very highly priced because of the lack of supply of all types of hay. In 2013, the normal price spread between high- and low-quality hays is beginning to return. The abundant rainfall that hit Michigan at the beginning of the hay baling season limited the amount of early maturity, high-quality alfalfa hay that could be baled. Thus, those hays are still in low supply and are still currently highly priced. With the moisture that is still in the soil, it is anticipated that second cutting alfalfa yields could be good, and if favorable drying conditions prevail, higher quality hay supplies will begin to materialize.

At this point in the growing season, it is always difficult to predict what the seasonal price of hay will be by fall and over the winter. There is still a significant portion of the hay harvest season to complete, and the grain futures market is forecasting a falling grain price into the fall. If the grain price drop does materialize, feed prices will move lower which could start to decrease demand for hay.

The bottom price line is easier to predict for hay. Michigan State University Extension budgets for 2013 predict that the average Michigan producer with hay yields around 4 ton per acre of dry hay will realize a cost of production in the range of $105 – 115 per ton at 16 percent moisture hay. Thus, most hay sellers that know their true cost of production will not be selling hay for less than $115 per ton unless the hay supply greatly outpaces demand. This higher cost of hay production can be related to the still relatively high input costs such as fertilizer, land cost, fuel cost, and the cost of machinery and the related repairs on equipment.

Hay prices in Michigan are currently experiencing a wide range of prices as some buyers have drought phobia and are willing to pay as much as they did last winter for hay. But prices have moderated slightly on the lower quality first cut alfalfa/grass mixed hays. Those hays in round bale packages are bringing $120 - $180 per ton. In big and small square bale packages this same type of hay is bringing $135 - $245 per ton. The high-quality alfalfa hays are still in very short supply and are bringing $200 - $320 per ton with not much price difference between the round and square bales. Within these ranges lower quality and rained on hay runs at the lower end of the price range as does hays that are picked up at the field.

Once the last cuttings are harvested in the fall and the yields are compiled, the hay prices will start to adjust accordingly. MSU Extension forage staff advises those needing forage to feed their animals to maximize their yields this summer, and buyers looking for hay to buy, not wait too long hoping for cheap hay. Based on the many reasons mentioned above it may take several years to return the hay price to a pre-2011 price level and it will take a surplus hay year to do that.                                                 

To locate hay for sale or to list hay for sale go to the Michigan Hay Sellers List which can also provide an update on the average asking prices of hay for sale in Michigan. For more information, contact MSU Extension educators Phil Kaatz at .(JavaScript must be enabled to view this email address) or 810-667-0341, and Jerry Lindquist at .(JavaScript must be enabled to view this email address) or 231-832-6139.

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