Iowa is importing hay from Texas. "Last year at this time we were sending hay out of Iowa to Texas. They had the severe drought in the southwest last year, and we have it here in the Midwest this year," notes Dale Leslein, manager of the Dyersville Hay Auction in northeast Iowa. The location at Dyersville is a weekly market which attracts hay buyers and sellers from a wide area.
Leslien said last week some hay is being hauled in from Texas, all the way to Dyersville, which is ironic because this time last year, Iowa was sending Iowa-grown hay to Texas. But things have turned around in the Upper Midwest this year, with the widespread 2012 drought. The drought is here this year, and was in Texas last year.
There is quite a bit of hay available in Texas now, he explains. There's a shortage of cattle in the southwestern U.S., as drought there the past couple of years resulted in cattle producers having to cull their herds. So they presently have a surplus of hay and even some of the pastures are being baled up this summer in Texas. Pastures are being baled because of the lack of cattle in Texas and ample grass. More of that hay may start finding its way to the Midwest.
Release of CRP acres has affected prices a little, but hay demand is still strong
What are the price ranges for hay being sold today at Dyersville? For good quality hay currently—the market has backed off about $40 a ton from recent highs. USDA on August 2 released Conservation Reserve Program acres for emergency haying and grazing due to the drought, so that's taken a little bit of pressure off the market. Leslein is looking for the hay market to bottom out in the next month or six weeks, "but right now we're still seeing the very good hay, the dairy quality hay, in the $250 range in big square bales, and round bales in the $180 to $220 range."
The lower quality CRP hay isn't bringing as much as the higher quality CRP hay. "There are very few what we call 'managed' CRP acres," he explains. These are people who spray for weeds and keep their CRP acres nice and clean. The clean CRP hay is bringing $120 to $130 for round bales, all the way down to the low $60 a bale price for the stuff that has trees, weeds and sticks in it.
~~~PAGE_BREAK_HERE~~~Where is hay coming from now, in late August? "Quite a bit is coming into the Dyersville auction from local producers here in northeast Iowa," says Leslein. People are taking advantage of the 60-day window the state government has given truckers in Iowa for moving round bales without the permit restrictions "so we are seeing quite a few round bales coming in locally to our market at Dyersville. But we are getting some hay from elsewhere too. We got a load recently from Canada, and also some hay from Kansas and Texas."
Demand is continuing strong and quality of Iowa-grown hay is good this year
Demand for hay is very strong currently. Dyersville and other hay auctions in Iowa are getting calls not just from Iowa buyers but from all over—Wisconsin, Illinois, Indiana, Tennessee, Kentucky, Arkansas. It doesn't matter where the hay supply is when people need hay desperately--they'll have it hauled to them to fulfill their needs.
What are hay auctions seeing for quality of Iowa-produced hay this year? "Quality is excellent," says Leslein. "This is probably one of the best years we've had for producing high quality hay. In a drought summer, very little hay is rained on when it's cut and laying in the field waiting to be baled. The only problem is this last cutting—the third cutting--has been a disaster in terms of volume produced. The yield is way down. It's not uncommon to see one round bale of alfalfa for every two acres. And when you get into harvesting alfalfa/grass mixed fields, I've heard it's taken as much as 10 and 11 acres to produce one big round bale."
Hot, dry weather in July and continued dryness into August stunted hay growth
Tonnage is way down and in late August hay producers are hoping they can get some significant rain soon and harvest one more decent cutting yet this year. "But overall, quality has been outstanding this year and the demand, especially for alfalfa or alfalfa-grass mixes right now, is very strong," says Leslein.
The exceptional heat Iowa and other areas of the Midwest had in July stunted hay growth. "This last cutting in places in many fields was only a few inches tall but it was bloomed out and we had to cut if in order to try to keep things on schedule and try to get another cutting yet this year," notes Leslein. "We have opportunity between now and the end of September or early October to get another cutting, so if we can get some more rain in late August and into September. Then we'd have a good chance of still harvesting a decent fourth cutting and it would be outstanding quality."
Lower test weight corn in feed from 2012 crop will also affect hay market
Drought has also affected the 2012 corn crop, as test weight of corn is coming in lower than normal. That will in turn affect feed rations for livestock. With lower test weight corn it takes more of the corn to get a ton, and we're going to see more corn needed to produce a pound of meat, says Leslein. And that will affect the hay market as well.
Feeding low test weight corn is a lot like feeding potato chips. You put it into cattle feed bunks and it disappears. To build up these rations, it's going to take either soybean meal or the feeding of higher quality alfalfa. "So, with the high price for soybeans now, we could see a substantial jump in the dairy hay price, especially with improving milk price futures," notes Leslein.
Recently October milk has been over $20 a hundred weight, the first time milk has been at that level in quite some time. Looking ahead, dairy farmers might not be in as bad of a profitability situation as they were four months ago. Alfalfa hay will likely continue to be a hot commodity this fall and winter. "It'll be interesting to see what happens to the market for high quality alfalfa hay," he adds.