Hay prices have backed off, in some cases sharply, at hay auctions in the Upper Midwest since the first of the year.

For the most part, auction owners and managers believe the market will stay steady the next few months. But a long winter could tighten supplies enough to push prices higher before new crop comes on.

“There’s just a lot more hay available out here than there was a year ago,” says Willie Groeneweg. He’s owner of Dakota Hay Auction, Corsica, SD, which holds weekly Monday sales year-round. “Across the board, prices are off 50-60%” from what they were a year ago.

At Dakota’s last sale in January, a load of “pretty decent, but not dairy-quality” alfalfa in round bales topped the market at $127.50/ton. On the low end, grinding hay sold for $110/ton.

Grass hay didn’t fare any better at that sale. “We saw $102.50/ton at the high end and $65/ton at the low end. Most sold in the $80-90/ton range.”

Relatively dry weather could nudge the market upward later in the winter, Groeneweg believes. “We haven’t had that much in the way of snow in our area this winter. There have been reports of some cracks starting to show up on bare ground. If it continues dry, people might start holding onto hay they have, thinking they’ll need it themselves next winter. That could cut into the supply a little and take prices higher.”

Prices moved downward at the weekly Wednesday Fort Atkinson Hay sales in Fort Atkinson, IA. “During January, it seemed like the price moved lower week by week,” says auction owner Carl Shirk.

Better-quality alfalfa hay recently sold for $200-225/ton, he reports. Last fall, the same type of hay brought $75-100/ton more.

One reason for the price drop, says Shirk, is that many dairy farmers bought hay earlier in 2013 than normal. “A lot of them got caught short on supplies a year ago, and they didn’t want to get into that same kind of situation this year. So they built up their inventories. Now we’re seeing a crunch on prices. The demand isn’t there.”

Shirk looks for prices to hold steady or trend lower until late winter or early spring. “We could see demand pick up a little bit if guys start running short. But until then, I don’t see any kind of drastic changes in price coming.”

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The trend is similar at the Equity Cooperative Livestock Sales Association’s weekly Friday hay sales in Lomira, WI.  Early in January, large square bales of dairy-quality alfalfa, weighing 750-800 lbs, went for $90-120/bale, reports auction manager Leo Amend. By the end of the month, the selling price was $70-100/bale.

Amend also believes dairy producers’ early buys could be playing a role. “We had better-than-average runs at the sale all through the summer and fall here. Normally, later in the summer, we’ll get one or two loads a week coming through. But this last year, we were getting 15-20 loads a week. Guys wanted to put some hay into storage early instead of waiting until the last minute to buy.”

Prices for lower-end grass hay at the auction also trended lower from $50-55/bale as January began to $30-40/bale at month’s end. “The demand for the lower-quality hay has dropped off. That could be because we’ve had a turn in the weather. Producers want a little better hay to hold their cattle together.”

Amend expects auction prices to hold at or near current levels through the winter. “In this area, there seems to be enough hay. We could have already hit the peak for the season. But you never know. If things get short in other areas, we could have more buyers coming in here.”

The price falloff on higher-end alfalfa has been more modest at the first-and-third-Thursday, quality-tested sales at Mid-American Auction Co., Sauk Centre, MN.

“On the real fancy hay, prices have softened some in recent weeks,” says auctioneer Al Wessel. “Real good” alfalfa brought $275-325/ton at his mid-January sale, down maybe $10-20/ton.

Part of the drop, Wessel says, could owe to dairy producers finding alternative feeds like corn or beet pulp or lower-quality hay to plug into rations. “The real good dairy guys always seem to be able to come up with a plan to make things work.”

Prices in other hay categories are holding steady. Grass hay stored inside is currently bringing $175-200/ton. “The demand for that kind of hay has been pretty good,” says Wessel. “It’s often difficult to find in our part of the country. The plainer stuff, stored outside, has been bringing $120-140/ton, while meadow hay has been selling for around $100-110/ton.”

He looks for the market to remain steady over the next several months. “Right now, there seems to be enough hay around. But there really isn’t anything to throw away, either. If we have a long winter, supplies could get a little tight.”

Contact Groeneweg at 605-946-5002; Shirk at 563-534-7513; Amend at 608-434-4030 or Wessel at 320-547-2206.

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