Five ways to get top dollar
Mapping out a strategy for getting the best possible price on the hay you sell at an auction isn't rocket science. Often, the difference between settling for a so-so price and hitting a market-topping premium boils down to a few straightforward marketing basics.
Consider the following:
Have hay tested. It's the No. 1 thing sellers can do to boost prices received at an auction, says Dale Leslein, auctioneer at the weekly hay and straw sale at eastern Iowa's Dyersville Sales Co. Leslein says that, for top-end dairy alfalfa, a test will routinely up the price by $30-50/ton, while tested grass hay will bring $15-20/ton more than untested hay.
Dyersville gives sellers the option of having hay tested before a sale by a local laboratory or selling it untested. The testing cost is $13/load.
“If you have a 25-ton load and get the $50/ton premium for a high test, you make an extra $1,250 for a $13 investment. It doesn't get too much better than that for a hay seller,” says Leslein.
Depending on the target market, University of Minnesota Extension educator Dan Martens recommends furnishing RFQ (relative forage quality) scores along with the standard analysis — RFV, crude protein and total digestible nutrients — provided at most tested auctions.
“It adds to the cost of testing and may require an extra day of processing at some labs,” says Martens, who monitors auction results from the Mid-American Quality Tested Hay Auction, Sauk Centre, MN. “RFQ data can give the buyer a little more confidence that the hay will feed well. That can translate into a better price.”
Emphasize appearance. As valuable as test results are, a lot of price decisions at auctions are still based on the physical appearance of the hay, notes Al Wessel, owner of Mid-American Auction, Inc.
“There's nothing more appealing to hay buyers than a nice, bright-green color,” he says. “If the hay has a little eye appeal, it makes our job a whole lot easier.”
Wessel adds that buyers also like to see tight bales. “They want to know that they can transport that hay without worrying about it falling to pieces on the way home from the auction.”
To ensure that hay maintains a pleasing appearance while you're waiting to bring it to auction, he recommends storing it inside and on pallets so it's off the floor. If you don't have inside storage, store the hay on a porous surface that will allow for good drainage and tarp it.
Be patient. Bringing hay to auction while it's still sweating is a common mistake made by auction sellers, says Leslein.
“You might know that the hay was put up just right, but buyers don't. When they see hay that hasn't quite dried, they're going to discount the price. We've had grass here sell for $30/ton because it was going through the sweat. The next week, hay out of the same field sold for $80/ton because it had completely dried.”
Deliver uniform loads. Whether it's tomatoes at the grocery store or hay bales at an auction, buyers like uniformity when they're purchasing products in bulk, says Martens.
“If you come across a bale that's grassy or weedy when you're loading the trailer, set it off to the side. You might be able to sell it to a neighbor who has some stock cows and isn't looking for the highest-quality hay or find some other market for it.”
Jeffrey Becker, a Wilton, IA, grower, agrees with that approach. He puts up alfalfa in small square, large square and round bales on 300 acres.
“If you put in two or three bales that aren't as good as all the other bales in the lot, those are the bales that will stand out to the buyers,” says Becker, who sells about 90% of his large square bales through the Dyersville auction. “It won't matter how good the rest of the load is. They'll base their bids on those lower-quality bales every time. It's just not worth it.”
Sell at the right time. Wessel notes that, even though the Sauk Centre auction holds its first sale of the season in early September, buyer attendance typically doesn't pick up until the late October-early November sales.
“There's a little more price volatility in the early sales,” he says. “Buyers are still assessing their needs for the winter and trying to get a feel for where the markets might be heading.”
He also points out that, while large dairies are always in the market for high-end alfalfa, they'll often become more-active buyers in late November and December.
“If they've had a good income year, they'll want to stock up on feed as a way of offsetting income for tax purposes,” he says.
Similarly, Leslein advises grass hay producers selling at auction to track markets closely during the fall months.
“Demand for grass hay usually starts picking up in September and October and carries through until Christmas,” he says. “By the end of January, though, (beef producers) are getting ready for calving and they're looking more for high-quality alfalfa than grass.
“So many (grass hay) producers will see that market going up in the fall and think it might be a good idea to wait until later to sell in the hope that prices will be even higher. But it usually doesn't work out that way. Last year, grass round bales were selling for $185/ton in October. By March, the price had backed off to $70/ton.”