Drought is not the only cause of roughage shortage

In March, large parts of the American Midwest experienced flooding. The very bad weather occurred just weeks before the planting season, damaging much of U.S. farmland. This ensured, among other things, that a large amount of corn and soy was lost. Farmers in the eastern United States also had to deal with extreme weather (such as Hurricane Florence).

Not only the grain market was affected by this, because large quantities of hay bales were also literally washed away. "It is the second year in a row that we are experiencing extreme weather. Last year drought was the problem, but now we are experiencing the opposite extremes," writes American livestock farmer Chris Meduna in a blog. According to him, the market is usually very dependent on a balance between supply and demand. “Right now, demand far exceeds supply.”

Extreme shortages
The extreme weather caused hay inventories in the Midwest to drop by about 24% this spring compared to last year. "While last year's stock was already well below average," reports Lance Zimmerman, data manager Cattle Fax, at news site UPI. According to Zimmerman, this makes it especially difficult for dairy farmers. "Cows are usually put out to pasture in the spring, but this year that was not possible for everyone. After all, the cows have to be fed and there is little or no good feed available outside. The only option for these livestock farmers is therefore to keep the cows to be fed in the stable."

However, before additional feeding can be done, an alternative food source must be found. To stay close to the ration used, they switch to corn stalks, grain and/or cotton seed. There are also farmers in Ohio, for example, who plant so-called 'warm season grasses' that can be harvested in the fall. However, these options are not nearly as nutritious as regular grass and hay.

Other livestock farmers swear allegiance to hay and travel across the country for it. This also applies to traders. Sean McCashin is one of those traders and indicates that he can hardly handle the high demand. "I have already sold a record amount this year. At one point we even traveled to Canada to buy product, but they are also experiencing shortages there."

Prices are rising rapidly
Because there is (very) little stock, the price has risen sharply in recent months. "If you have to transport straw or hay by truck, it is almost impossible for the 'normal' entrepreneur," says McCashin. According to the U.S. Department of Agriculture, the price for several types of hay is currently at a 5-year high. The price may remain at this level due to the fact that some livestock farmers do not want to switch to alternatives and therefore accept the high price.

Today the average price for the very good quality is $239 per tonne for a small bale and $190 per tonne for a larger bale (€215 and €171 per tonne respectively). However, prices vary widely, with the most expensive small bales costing $280 per tonne (€252 per tonne) and the most expensive large bales costing $275 per tonne (approximately €247 per tonne). As quality decreases, the price naturally also decreases. Lower quality sells for prices between $109 and $159 per ton (large bales). “In North Carolina, the price in May was $100 to $150 per ton for 1 average bale, compared to $70 to $90 in previous years,” Meduna reports.

In the Netherlands, the price for meadow hay was at a very high level last year. However, the price has now dropped again.

Opinions about price trends for the coming period are variable and differ per region. In Iowa, prices are now taking a dive, although this is mainly because the good quality is sold out. This also applies to product from Missouri, where demand is now declining slightly. On the other hand, prices in Wisconsin have risen enormously in recent weeks, as the price for quality products is still strong here. For other regions, both demand and price are fairly stable, according to a report from the US Department of Agriculture.

Straw prices have also increased considerably. Small square bales averaged $4,70 per bale last week, with a price range of $2,50 to $6,50. The large square bales averaged $50 per bale, with a price range of $25 to $125. The large round bales recorded an average price of $51 per bale, with a price range of $25 to $72.

Recovery does take some time
Meduna expects that the recovery from the two tough years will take some time. "I think it will be extremely difficult to find hay next year. That's why I'm trying to buy and store a little more this year, so that I won't immediately have a shortage next year." Other American livestock farmers also use this tactic, although not everyone is enthusiastic. "If for some reason prices go up even more, you may look like a genius. But if prices go down because there is still plenty of product, you've shot yourself in the foot," McCashin said.

In Wisconsin, inventory is currently at 58%, which analysts don't necessarily consider small. They do not share Meduna's opinion. According to them, a few plots that were previously too wet will be able to be harvested later in the season. According to them, there are also sufficient alternatives available to fall back on. However, if next year is another year of extremes, it will cause problems. "Livestock farmers with little liquidity will no longer be able to keep their heads above water and their business will be forced to close," Meduna concludes.