On today’s Cow-Calf Corner, Scott Clawson, M.S., Oklahoma State University Cooperative Extension Service NE Area Agricultural Economics Specialist writes about strategizing for hay season.
The value of a hay bale is determined by a complex set of supply and demand factors. We can summarize this by saying that hay, especially in drought conditions, acts an essential item for the cowherd. Thus, it will be purchased for the cows regardless of price until it reaches a point where liquidation of cows becomes necessary. While western Oklahoma is parched, most two-lane highways in eastern Oklahoma have hay for sale and fertilizer spreaders are starting to shake off the cobwebs.
The market determines what the value of the hay is. This issue is separate from what it costs to produce hay. It seems like no conversation about the cattle business can occur without comparisons to 2014. From December 2014 to January 2025, fertilizers, chemicals (including herbicides), and fuel have increased by 13%, 15%, and 9%, respectively1. During the same period, supply/repair costs and machinery costs have risen by 38% and 51%, respectively1. Admittedly, this comparison is not bulletproof. It compares two points in time and the categories are broad, but it suggests that the cost of owning and maintaining equipment warrants further analysis on the ranch. The graph illustrates the price trend of haying machinery and attachments. Careful consideration and planning will be needed when replacing these assets.
So, now what? Are there other strategies to consider? Currently, there is a decent chance that hay could be purchased at a lower price than the cost of production (assuming all costs are considered). A ranch that has adequate hay storage could explore scaling back hay production this year and buying hay on the open market. This would create the opportunity to reduce equipment wear and tear, extend its lifespan, increase grazable acres, and potentially lower fertility inputs. Having adequate hay storage capacity provides multiple risk management and business opportunities. Building or expanding that capacity could serve as a worthwhile investment as cattle prices allow money to be reinvested.
Running cows and row crop farming don’t always overlap, but in this matter, they do. The price of our crops (hay, corn, etc.) is sensitive to changes in supply. Sufficient hay inventory and expected production will continue to pressure hay prices. As cattle prices continue to flex their muscles, how we allocate these profits will have long-term implications for the ranch.
1Agriculture Prices (February 2025). USDA, National Agriculture Statistics Service
