Brace for hay shortage, price hike

Hay prices are above average in Saskatchewan and may get higher this fall. If a number of factors come together, prices could spike.

Most forage sellers are now asking five to eight cents per pound, with most of the hay trading closer to five cents.

Trewett Chaplin, a livestock producer from Craik, Sask., thinks prices will increase in coming months because green feed supplies may be tight.

Chaplin and other ranchers assumed many farmers would bale cereal crops in areas where crops struggled in hot and dry weather this summer in Saskatchewan. But that’s not the case.

“The (grain) crop is turning out better than expected… so there’s not going to be any green feed on the market,” said Chaplin, who raises cattle and bison.

“They’re still taking them off (combining), there’s not a lot of guys willing to part with their crops (as green feed).”

The drought this summer in southern Saskatchewan generated a lot of media attention for the potential impact on grain and oilseed yields.

The extreme weather also damaged hay crops, with some areas reporting forage yields of a half or a third of normal.

Dave Kerr, Saskatchewan Forage Council president, estimated one-third of the province might have a shortfall of hay this year.

Most of the shortage will probably be in southern Saskatchewan, where the heat and dryness was most severe.

As of the third week of August, many online sellers of hay were asking five to six cents per lb. for baled hay, which is higher than normal in Saskatchewan.

“Most hay, on average years, is only 3.5 cents per lb. That same hay is going for five to six cents a lb. this year,” Chaplin said. “Normally eight cents a lb. would be dairy quality feed. But for regular hay, that’s insane.”

Besides a lack of green feed, other factors could propel hay prices higher this autumn.

Farmers in parts of North Dakota, Montana and South Dakota also suffered through a drought and heat wave in July. American producers bought hay bales from Canada earlier this summer and may buy more as winter approaches.

“I think there was a lot of last year’s hay that has been sold, across the line (to the United States),” said Kelly Williamson, a cattle producer in Pambrun, Sask.

“So the reserve (of hay) is gone.”

With the U.S. dollar trading at a C$1.26 there is a price advantage for American buyers.

Plus, there may be transport subsidies for struggling U.S. farmers.

“It’s going to depend on what kind of trucking incentives the guys across the line are going to get,” Williamson said.

“Which is probably going to create the (price) floor for our (hay) market.”

Yet another factor is pastures. The hot and record dry weather, with less than five millimetres of rain in places for the month of July, scorched grazing lands in Saskatchewan. If the pastures don’t bounce back, livestock producers may have to put their cattle on feed much sooner than normal this fall.

“A hot July isn’t going to kill our hay crop here…. But it will fry your pastures and send you to the feed stack 30, 40 or 50 days early,” Williamson said.

“Then that really puts pressure on trying to source extra feed.”

Of course, there are other ways to feed cattle through the winter besides hay. Livestock producers can use straw and supplement with grain and pellets.

Alternative sources of feed could temper hay prices this fall and winter, but the market may explode if the drought persists into 2018, Williamson said.

“If we have a dry year next year and we have below normal hay stands, we’re in for quite the show.”

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