I have heard a lot of comments from horse owners about how high hay prices are and the huge jump in price from last years crop. There is a long list of why prices are so high, and the discussion would fill many posts, but it boils down to supply and demand.  Very few (if any) hay farmers receive subsidies from the government to grow hay, I actually don’t think there is a program for hay, so the government has little do with the amount of acres being grown unlike corn, wheat, soybeans, etc.

Central Oregon’s hay is grown for the local horse market, but a large portion is also trucked to dairies, as well as to ports for export.  The hay that leaves the area is what causes the price swings in our local market. Last year, Washington got lots of summer rains, and many tons of orchard grass that would have been exported or used as horse feed got drenched and turned into cattle feed. The growing season was good however and the supplies did not really tighten until spring of this year. Barns got emptied quickly and by this last spring, barns were empty.

Another interesting thing happened as well.  A huge jump in wheat prices.  Wheat prices jumped over $9 a bushel this last winter and suddenly wheat seemed really attractive and farmers started tearing up the old hay fields and putting in wheat.  This happened not only in Central Oregon, but also all over the Northwest.  This meant a lot less acreage in the Northwest, and coupled with our cold spring, the amount of horse hay being put up was a whole lot less than normal this year.  This exact same chain of events happened in  2008, but not as many fields in Central Oregon were converted to wheat as this year.  The prices were as high as $250, but in 2009, they plummeted back down to $130-$150.

So what is going to happen this coming hay season? Will prices fall back down again like 2009, or will prices stay high again for another year?  In my opinion, a good gauge to watch will be the wheat prices. If prices are more attractive for wheat than hay, there would be no reason to put hay back in, expecially with the crash of 2009 fresh in farmer’s minds. But on the flip side, a drop in wheat prices could mean a rush back into hay and orchard grass would again be more affordable.  Right now market prices in Central Oregon is about $200-$240 for horse quality orchard grass, and I think that these prices are unsustainable for the horse market with the economy as it is.  However, another cold spring or lots of summer rain storms could quickly drive up next years prices, but this winter keep an eye on wheat prices.