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Michigan hay prices showing relief, but how low is unknown
 
By SHELLY STRAUTZ-SPRINGBORN
Michigan Correspondent

EAST LANSING, Mich. — Michigan’s hay market is showing signs of relief from last year’s drought-driven high prices; however, experts and growers say it’s too soon to tell how much prices will drop and what overall demand will be for hay going into winter.

Russ Knapp has a couple hundred bales of alfalfa-grass mix hay in his barn near Edwardsburg, Mich. It is listed for sale on the Michigan Hay Sellers List, on the Michigan Hay Exchange website and through flyers posted locally. He hasn’t had much interest from buyers, yet – which is different from last year, when people were traveling from out-of-state to purchase their hay because of tight supply caused by widespread drought in the Midwest.

“We’ve been advertising, but we still have quite a bit of our hay,” Knapp said. “I wouldn’t say the market is great.

“Last year, people were coming up from Kentucky to buy hay because they were having such trouble getting it down there. It was a long way to transport, but they did what they had to do, and they paid a premium for doing that.”

In the southeastern part of the state, Michigan State University extension educator Phil Kaatz said supply is pretty good, but quality is lacking in dry hay.

“There’s a lot of hay that has been made, but the quality of it is not nearly as good as it was a year ago. Because of that, the prices are reflecting some of that change in the quality. One of the things there’s going to be a real premium for is high-quality alfalfa dry hay,” he said. “There’s always a need for it and a market for it.”
Knapp said putting up his first-cutting hay was delayed due to rain, which also impacted the quality. “Our first cutting was pretty tall – probably waist-high. It got kind of woody. It’s a little coarser than we like, but it’s decent,” he said.

Jerry Lindquist, an MSU extension educator in northwestern Michigan, said yields on first- and second-cutting hay are up from a year ago, but farmers are facing other difficulties.

“Hay harvest has been challenging because of poor hay-drying weather with too many cloudy days,” he said. “Lots of hay was rained on and later in maturity because of poor weather conditions, so quality is lower than normal for the majority of first- and second-cutting.”

While hay supply is better this year than it was last year, there is little carryover of last year’s hay, which is expected to have some bearing on market conditions going into fall.

“Supply has improved over last year’s drought conditions, but still, the supply is not meeting all the demand, so only the lower-quality first cuttings have fallen much in price,” Lindquist said.
Average prices are running $115-$135 per ton for low-quality first cutting, $130-$160 for average-quality first cutting and $180-$280 for high-quality alfalfa hay. Kaatz said this represents “a shift of the entire pricing structure, except for high-quality dry alfalfa hay that is in short supply.”

Both Kaatz and Lindquist are interested to see what happens with pricing as other factors come into play, such as grain development and pricing going into fall harvest. “If grain prices continue to fall, they will soften the price of high-quality hay a little, as feeding grain will again become an alternative to hay,” Lindquist said.
“Producers are doing a good job with the amount of grain that is going into feeding cattle,” Kaatz added. “They can only add so much grain to their ration.”

He said it is possible, however, it will impact the hay market. “If the price of corn continues to drop, we wonder what it is going to do for the price of hay. They are competitive.”
8/16/2013