Look for grass hay prices in the southeastern U.S. to stay on the high side in the months ahead – barring any major weather turnarounds, says Curt Lacy, ag economist with University of Georgia Extension. “Right now I don’t really see anything coming along that’s going to cause hay prices to come down very much, if at all,” he says.

In recent weeks, good cow hay (bahiagrass or bermudagrass), packaged in mid-sized round bales weighing around 1,000 lbs, has been bringing $40-50/roll in the region. Premium grass hay has been selling for $50-55/roll, Lacy reports.

The strong likelihood of persisting drought in the region will undoubtedly play a big role in determining prices, Lacy says. As of early April, a U.S. Drought Monitor map showed parts of Georgia, Florida and Alabama in extreme drought, with moderate-to-severe drought extending into the Carolinas.

“Some areas did get some timely rains over the winter and early spring,” says Lacy. “But overall we’re still very, very dry here. We didn’t see a lot of recharge. It’s also been very warm. A lot of our winter annuals are maturing quickly and wilting down rapidly. If it continues dry and warm, hay production and prices are going to be affected.”

Still to be seen is whether the 2012 harvested hay acres estimates for the region in last month’s USDA Prospective Plantings report are on target. In the report, USDA projected acreage increases ranging from 2% to 15% in Georgia and the Gulf Coast states of Louisiana, Mississippi, Alabama and Florida.

But Lacy wouldn’t be surprised to see at least some hay acreage plowed up for peanuts or cotton. “I wouldn’t expect very much of that to happen with dryland pastures and hayfields, but it might make sense on some irrigated ground. We’ve been hearing reports of producers taking advantage of opportunities to contract at some very good peanut prices.”

Strong beef cattle prices could also come into play. “Cow and calf prices are pretty good right now, and it looks like they’ll stay that way for several years to come,” he says. “The beef people are going to be willing and able to spend more for hay to keep their animals around.”