Hay prices spike to highest level in years
August 27, 2013
Recent rains may bring some relief to Colorado hay prices, but ranchers shouldn't expect relief to their wallets anytime soon.
Prolonged drought conditions have caused hay prices to soar statewide, putting a pinch on ranchers and livestock owners. In the Mountains and Northwest Colorado region, U.S. Department of Agriculture hay reports show current prices have leapt by about 54 percent since five years ago, from $6.50 a bale to $10 a bale. But Colorado's most recent hay report, released on Aug. 15, may signal modest improvement.
"We're seeing a weaker undertone to this market with monsoonal moisture coming in, and pasture conditions are improving," said Randy Hammerstrom with the USDA-Colorado Agricultural Marketing Service.
A weaker market undertone means hay prices could start trending downward, but Hammerstrom cautions prices changes won't be dramatic. He also said variables make market forecasting difficult if not impossible.
"I wouldn't call it sharply lower," he said. "There is still concern over inventory and lack of inventory, supplies are on the tight side."
Inventories remain tight after drought conditions from the last two years. Kent Whitmer, of Lazy T Rocking K Ranch in Kremmling, sells hay to livestock owners throughout Colorado and in nearby states. Before the drought struck, he sold his hay for around $5.50 a bale. He's now up to $9 a bale, and said his same weed-free certified hay goes for as much as $15 a bale at feed stores. With a particularly heavy drought hitting the southwest region of the U.S., demand from states like Texas and Oklahoma has pushed hay prices even further as they gobble up Colorado supplies at a premium.
"It's just a matter of economics, drought is the primary driver," Whitmer said.
Last year's drought hit Whitmer's operation particularly hard. Growers on the Front Range and northeast portions of the state can get as many as three cuttings each year, but a short growing season only allows for one cutting in high-elevation areas like Grand County.
"We barely had enough for our own livestock, so I didn't sell any hay last year," Whitmer said.
While drought continues to plague several states, the summer's monsoonal rains helped improve the quality of hay in Colorado. Hammerstrom said his office has seen a 10 percent increase in range conditions in recent weeks. Front Range and eastern plains growers especially saw some relief, but wet conditions have alleviated conditions in the northwest as well.
"Craig and Meeker may be a little drier than we would like, but areas like Steamboat and Walden have had fairly decent moisture," Hammerstrom said.
Hay demand has also decreased as horse owners, burdened by the heavy cost of feed, sell off their animals.
"With prices going up, I see people getting out of having horses," Whitmer said. "It's a luxury — that's the first thing to go before a car payment or mortgage for most people."
Hay prices have placed a heavy burden on horses in drought-ridden states, with owners abandoning their hungry and unwanted animals. According to Travis Hoesli, with the Colorado State University extension in Grand County, land managers for the Pawnee National Grasslands have seen an increased number of horses in the area, as strapped owners illegally release them.
"It's a big mess with the high hay prices, they can't afford to feed them and can't afford to keep them," Hoesli said.
While a bad deal for horse owners, slowly increasing supply and dwindling demand could bring local ranchers a reprieve down the road.
"I don't think it's near as bad, hay prices have come down a little bit, but it's still rather high compared to the 10-year average," Hoseli said. "These things all affect each other. That drought over the last two years has really put the market in an uproar."
According to Hoseli, it will take a few years for hay prices to level out. But barring any further market stresses like drought, small local improvements may be noticeable by next spring. Area ranchers usually plan for a worst-case scenario during winter months, storing as much hay as possible to see their animals through the cold season. They'll sell any surplus feed come spring.
"Locally, I think things are starting to stabilize," Hoseli said. "Most everyone I've talked to is pretty optimistic about putting up what they need and having a little left over."