Hay Prices Remain High with Areas of Drought

When southeast Nebraska rancher Paul Johnson hauls water in the July heat to cattle whose pond-supplied tanks have run dry, he’s often thinking about winter. He’s wondering if he’ll have enough hay after a drought-plagued year to feed his cow-calf pairs through the cold months when grazing is no longer an option.

Paul Johnson, HJ Bar Ranch - Palmyra, Nebraska: “This year I mean, we are probably 30 to 40 percent of what we normally get or whatever so I mean… usually I put up probably a couple hundred bales of good grass hay and I think, so far, I’ve put up maybe 30 or 40 and I am a little over halfway done.”

Johnson and other livestock producers in parts of Nebraska and southern Plains states have endured moderate to exceptional drought for much of the spring and summer. Early July rains may have settled the dust in Johnson’s area of Nebraska, but they didn’t ease concerns about hay prices and supply as the year’s early cuttings came up short.

The brome grass Johnson counts on for the majority of his hay grew poorly during the dry spring.

Paul Johnson, HJ Bar Ranch - Palmyra, Nebraska: “When I first started baling my brome, I said, ‘It’s going to be short.’ And I was talking to a lot of neighbors and they were all concerned what they were going to do with hay or whatever. I said, ‘Well I’m going to start making some calls because I’m going to get it bought now versus later.’… I reached out to some people in the areas that have had a little bit better rain and more hay supply and purchased four semi loads from out of the area and had them hauled in here just so I have a reserve and feel comfortable.”

Johnson thought the $175 he paid per ton for the Missouri grass hay was fair considering many in his local area were selling similar hay for $260 a ton. The 2022 hay crop hit record prices nationally, averaging $235 a ton, which is 40 percent higher than the 10-year average. Already this summer, Texas, another state battling drought, has seen prices occasionally reach $400 for high-quality alfalfa.

Paul Johnson, HJ Bar Ranch - Palmyra, Nebraska: “There’s people looking for hay. I mean I think our only saving grace is that the cow herd is shrinking. So I mean…I think overall, demand may be down somewhat because we have less cows to feed now than in the past… but, still, if everyone is 50 percent or less of their normal cutting, this hay is going to be tight.”

The U.S. had 95.9 million head of cattle as of July 1, down three percent from a year earlier, and a continuation of an ongoing downward trend that began in 2019. Connor Biehler, a beef systems educator with Nebraska Extension, says decent cattle prices over the summer have at least helped ease some of the financial hit from buying more expensive hay or having fewer bales to sell.

Connor Biehler, beef systems extension educator –Eastern Nebraska Research Extension and Education Center: “So last summer, we started to see…quite a bit of people getting rid of some of their cows, selling them off. If you look back at the 2012 drought and how that affected the cattle markets, in 2014 we saw a drastic increase in price of cows and calves as well. We are at a pretty high end of our calves… so I think … a lot of people are trying to avoid getting rid of their cows so that way they don’t have to rebuild their cow herd once the conditions become good again….A lot of guys who were offsetting their hay and maybe feeding a little bit of grain were maybe balking at doing that this year just because the price of grain is so high. If you take it to town, it’s got a little better value for you than putting it through your cows.”

Hay producer Josh Weems, from Adel, Iowa, has regular customers outside the state – primarily in Nebraska, South Dakota and Wisconsin -- and believes he will be able to continue to supply them this year, despite some struggles.

Josh Weems, producer - Adel, Iowa: “The alfalfa holds its own in drier weather, sometimes the later cuttings kind of fall off a bit, but the grass has really been a struggle to produce for people that want or need grass hay, it’s been a lot less and had to charge a little more because of it.”

Because hay is bulky and expensive to ship, Weems says it tends to be marketed locally but the severe drought in adjacent states has also influenced prices close to home.

Josh Weems, producer - Adel, Iowa: “I look at the Facebook Marketplace and I have never seen people asking out-of-the-field prices as high as they are this year. I’ve seen a lot of guys just straight up on bales like that that they just made being $185 or $200 a bale so take that times one and a quarter and there’s your price per ton…I haven’t seen it that high before…And the small square bales? Holy cow. People think them things are worth gold, evidently.”

Increased input costs have also helped drive up hay prices. Weems says it has cost him a lot more in the last few years to produce his annual goal of 2,500 tons of hay.

He’s also seen a trend where owners of large cattle feedlots rely on others for their hay, versus the smaller feedlots of the past that typically grew their own.

Josh Weems, producer - Adel, Iowa: “Now, you can have a 10,000-head dairy that doesn’t farm a lick so that hay has to come from somewhere. And I don’t know that as an industry we are keeping up with that change.”

Having competed a second cutting of hay, Weems, who also raises cattle, won’t breathe a sigh of relief until he finishes his third and, possibly, fourth cuttings.

Josh Weems, producer - Adel, Iowa: “I think the entire Midwest is on a knife’s edge as far as water. I mean I look at the drought map. Everybody can see the drought map. Everybody is like, right there...I had a guy tell me once: there’s always hay for sale. You just might not be able to afford it.”

By Colleen Bradford Krantz, colleen.krantz@iowapbs.org