Tuesday, August 21, 2012

Drought increases hay prices, making it even more difficult for livestock producers to feed herds

The price of bales of hay has more than doubled this year, with average prices reaching record levels. The price increase has made hay a major commodity in drought-stressed areas of the U.S., "far out-pacing the rally in corn and soybeans prices," Gregory Meyer of the Financial Times reports. The increase is also putting more stress on ranchers who are struggling to feed their herds.

Hay supplies per animal are at the lowest level in more than 25 years, Department of Agriculture economists told Meyer. This will increase meat and dairy prices as ranchers shrink herds because they can't afford to feed them. Ranchers would typically be grazing cattle now and mowing hay supplies for winter, but corn-price increases and poor pasture conditions are forcing many to use existing hay stores. The U.S. faces its smallest hay harvest since 1976, Meyer reports.

The rise of hay prices has been "largely unnoticed outside the cattle industry," but its price increase is significant, Meyer reports. At an auction in Iowa last week, hay sold for $300 per short ton, a 150 percent increase from last August. In Missouri, prices rose by 70 percent, according to the Agricultural Marketing Service. Hay has been delivered to Iowa from as far as Manitoba, Canada. (Read more)

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