Agricultural markets are notoriously difficult to predict. A sudden change in weather or the implementation of some new economic policy may send ripples that affect the price of a variety of agricultural products, among them hay. Nevertheless, there are still factors that are worth considering when evaluating the price of hay. Factors such as dairy farms closing and decreasing overall acreage of alfalfa ought to affect the price of hay in 2019.
First of all, changes in the amount of alfalfa hay acreage will change the supply of hay and thus its price. The amount of alfalfa hay available has been on a consistent downward slope, and this dearth of alfalfa means that those seeking to buy it may have to deal with higher prices. On the other hand, other types of hay are increasing in abundance, so if you are looking to buy feed that is not alfalfa, you may be pleased to see that you will not have to pay a premium in 2019. These trends have been consistent since the late-1970s, so it is a safe bet to assume that these price trends will continue.
Another factor to consider when predicting the prices of hay in 2019 is the trend of dairy farms closing. This might seem to be unrelated to the price of hay, but it is actually intimately related. When a dairy farm closes, it will likely liquidate its supply of hay, because it no longer has cattle to feed. As a result, there will be a temporary surplus of hay, which will result in a sharp decrease in the price of hay. One region where this is becoming especially common is the northeastern United States. For this reason, anyone looking to buy large quantities of hay may benefit if several close-by dairy farms close. However, whereas hay acreage trends have been demonstrated over the past 30 years, these trends surrounding dairy farms are not as longstanding. As such, to rely on prices to fall on account of this one reason may not be the best bet. However, it would appear that the odds point toward hay prices being driven down by the closure of dairy farms.
The decreasing acreage of hay looks to increase the price of hay in 2019. On the other hand, the closing of dairy farms seems to indicate that hay prices will decrease in 2019. These two forces look to be working against each other, so the magnitude to which hay prices may increase or decrease is unknown. Despite this, it is still important to keep these trends in mind.
The Hay Manager, LLC
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