In 2014, hay prices skyrocketed across the country. In 2016, the opposite occurred. Since these two eventful years, hay prices have remained relatively stable, however. Nevertheless, every year it is possible for there to be large upward or downward movement on hay prices. And while predicting what these prices will look like is no exact science, there are still a couple of factors that are worth examining.
First of all, the overall inventory of hay is an important component of hay price. In 2020, hay inventories were generally rather high. Generally, if hay producers can produce larger amounts of hay, prices will decrease to reflect this increase in supply. Nevertheless, hay inventory numbers generally represent hay inventories in the aggregate, so the quality of hay is often unaccounted for. As such, it is important to exercise caution, because even if it appears that there is a lot of hay on the market and thus the hay is cheaper, there might still be a shortage of hay.
Likewise, total acreage of hay produced needs to be considered as well. More acres of hay produced generally correlates with an increased supply of hay. Like with overall inventory, though, it is vital not to assume that you will get all your hay needs met cheaply. Conversely, if you are selling hay, you can rest assured that if your hay is truly top notch in terms of quality, you will still be able to sell it for a hefty profit.
Another important factor to consider is whether other countries are importing American hay. If these countries are hesitant to import hay, there will be a corresponding decrease in demand that will depress hay prices. On the other hand, if hay buyers across the globe are particularly eager to purchase American hay, expect to see an increase in prices. If there is one lesson to be gleaned from this point, it is that to predict the price of hay, you must examine factors outside of domestic hay markets.
Finally, it is important to consider the health of the beef and dairy industries. Obviously, if these industries are struggling, the demand for hay to feed farmers’ livestock will likely tumble. Like with how it is impossible to understand hay prices without taking an international approach, it is also impossible to understand them without looking at other closely related economic sectors.
Unpredictable factors like weather will make it difficult to pinpoint what the price of hay will look like in the future. Nonetheless, looking at factors like inventory, acreage, exports, and the health of the beef and dairy industries will make projecting an easier task.
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