Recent rains may result in hay prices softening a bit — but not by much, say experts
“We have got rains and some of the pastures are rebounding,” said Ed Shaw, a hay exporter from Olds. “The yields are going to be lower than normal because it was a slow season and it got started late. Some of the areas may only get one cut this year because it was so late.”
The situation can vary dramatically from one region to another, but Shaw doesn’t see much relief for producers facing a struggle to feed their cows over the winter.
“Prices for feeder hay will soften but not a lot,” he said, adding that’s mostly because prices are already at elevated levels. “Last year the prices for feeder hay were unusually high. There were farmers who told me that they were selling round bales for $250 a ton. That’s going to soften.”
However, hay prices are not usually firm until the end of October, said Ted Nibourg, farm business management specialist with Alberta Agriculture and Forestry.
“At that time, we have a good idea of what came off … (and) what we’re looking at for winter,” he said. “We have a good idea of what the cattle market is doing, too. If calves are all going to the feedlot rather than backgrounding, there’s a decreased demand for hay.”
And while many areas have received a lot of rain, parts of the Peace, the south, and eastern areas remain very dry. On the other hand, it’s rained so much in some areas, it will be hard to get hay off in a timely fashion, which means quality will suffer.
The situation is especially tough because there was no carryover from last year, noted Shaw.
“There was immediate stress in the spring and there was no feed,” he said, adding feed was coming in from Montana.
But it’s never cheap to move hay, and that’s especially so this year.
“What we’re seeing is that some of the trucking companies are taking advantage of it,” said Nibourg. “We’re hearing prices in the $6.50 range in miles to move it. If you’re going 20 miles, that adds another $130 to the price of hay.”
Producers in dry areas may find it’s cheaper to move cattle to hay, rather than vice-versa, he said.
Competition for hay is also up because Eastern Canada and the eastern U.S. had a rainy spring, with 80 per cent of alfalfa lost due to winterkill in Ohio and on the eastern seaboard.
“They’re also facing a big shortage,” said Shaw. “The overseas market is demanding more and more hay.”
The overseas market typically buys higher quality, but that’s not a given this year.
“With the rains, there might be more low-end available, but some of the markets are buying more low-end, too,” said Shaw. “The demand worldwide for forages is increasing.”
Normally, this has a positive effect, prompting more producers to grow for the export market and since not all of their hay is export quality, putting more hay back into the local market.
“The overall picture is that it’s not just what is happening in Alberta. Worldwide markets affect what is happening,” said Shaw.
Parts of Saskatchewan are still very dry and producers there are seeking more hay.
But a rebound in cereal crops should be a positive.
“Some farmers take some of their barley, wheat or oats and put that into feed rather than grain… and that could alleviate the shortage”, said Shaw.
If you’re buying, make sure you’re spending money wisely, Nibourg said.
“Know what’s in your feed,” he said. “If you get good quality feed, you may get by with less. If you have poor quality feed, you may have to supplement.”
And don’t overbid, he said, noting that last year some cow-calf producers were paying up to 12 cents a pound for hay.
“The breakeven I worked through was eight cents. If you are paying more than eight cents a pound for your hay, you’re losing money,” he said.
This might ring even more true because cattle prices are coming down. There will be reduced calf prices in the fall, and culled cow prices are already down, he said.
Shaw recommends producers develop a strategic plan to look at different feeding options.