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March 2016

What The Hell Happened To The Hay Market

WHAT THE HELL HAPPENED TO THE HAY MARKET?


Directly or indirectly, this question comes up from hay producers of every type of hay, in every bale size, from coast to coast and border to border! If this is a question in the back of your mind or that’s been burning on your brain and keeping you awake at night, you are not alone! Hay producers ask me, "How we can go from the highest hay market three years ago to the lowest we’ve seen in possibly decades?" In this short blog I am going to try to explain what I believe has happen to the hay market.

I sit in a somewhat unique position between grower and buyer bombarded with stories, questions, complaints, and down-right depression at least from the grower’s standpoint! So I am going to get personal and frank. Let’s face it- the hay market is far below its peak of 2012 and it’s going to be that way for a while. Let’s face another fact, the market is depressed from every direction- cattle, corn, wheat, oil and the list goes on and on….should I stop? I said I was going to shoot it straight!

So let’s address the first question to clarify a few things, “WHAT THE
HELL HAPPENED TO THE HAY MARKET?” To understand this, we must first understand some of the things that led up to the highest hay market across the board that probably any of us have or ever will see in our lifetimes. One of the first elements that started the increase in the hay market was whenTexas and some of the southern states began to experience drought in 2010, which ramped up to severity in 2011 causing a desperate need for hay. Consequently, hay started flowing south as fast as it could be loaded on trucks which used up a lot of the reserves. Just as they were hoping for a little relief along comes 2012, one of the most widespread droughts in US history. As we all know this drought severely affected not only the high hay producing states but nearly every state. This of course caused an even higher demand and lower supply- that whole supply and demand thing!

Now along with this another thing was happening; buyers realized it simply was not cost effective to pay the kind of prices that were being demanded for a scarce and often low quality product. So livestock producers and dairies did what any good manager would do- they found other, much cheaper sources of feed and filler to take the place of hay. Some large dairies and feed yards I’ve spoken with have nearly pulled hay completely from their rations, if not completely, they just simply replaced hay with almost any other commodity that they could make work. This in my opinion single-handedly hurt the hay market for possibly years to come! Now of course hay producers are going to happily take the highest prices offered, most of us would do the same, but the problem with this is we have now created in my opinion an even larger issue.

Next comes a few years of abundant moisture resulting in huge hay crops all across the nation. We now have much lower demand, including a significantly decreased demand in the export market… but that is another subject altogether. As we now know it’s just going to take some time to clear up this problem. Some of the largest consumers of hay, such as big dairies and feed yards who previously bought up huge volumes have not just cut their hay use by half but in some instances much more! This is a problem for growers. So what can we do? All hope is not lost- I have a saying for whatever it is worth- Good hay sells! Put up the best quality product you can, whether it’s rounds or squares. For squares build a shed or at least for heaven’s sake- buy good quality tarps and cover your hay! Take care of it, you don’t grow grains and let them sit outside to rot, don’t do it with your hay!

Last of all a crucial part of your operation that a lot of growers miss is marketing. It is highly beneficial to hire a reputable marketing company to find markets that you may never be able to reach or have the time to search out. This will expose your hay to buyers in every market at all times which will greatly boost your potential and profits. It may cost a small amount, but in the long run it will be money well spent. Minimize costs, produce quality, protect that quality, and hire a reputable marketing company that gets you results for your hard work and commitment.

Tom Baer, Owner and Auctioneer