From CattleFax
As most producers are aware, hay prices have gone through the roof in recent months and continue to climb to new record high levels. The USDA average hay price was $170/ton in July, which is 52% ($58/ton) higher than last year. This is the biggest year-over-year increase in price since October 1973 when hay prices were at $46/ton compared to $30/ton the previous October. It’s worth noting that the USDA hay price is a U.S. average price, and regionally prices vary significantly. Keep in mind the latest report from Texas indicated high-quality alfalfa hay prices are currently running in the range of $270 to $320/ton.
Assuming a cow consumes 25 lbs. of hay per day through the fall and winter, she would consume 1.875 tons of hay over 150 days. With prices $58/ton higher than last year, that is an extra feed expense of $109/head. Compare these added costs to this year’s higher calf prices. In July, a 550-lb. steer was $146/cwt. compared to $123 last year. That is $23/cwt. – or $127 per head – more than last year. While the increase in calf values versus last year shows one of the biggest increases in history, the massive increase in hay price is offsetting nearly all of the calf price gain. Keep in mind, these estimates are based on average prices and costs, which hay costs will vary widely for different regions of the country. Nevertheless, the point is many producers are feeling – or will feel – the impact from higher hay prices along with the steady increase in nearly all other costs over the past several years. This will likely temper some of the enthusiasm for expansion of the cowherd in regions of the country where the drought is not taking its toll.