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Hay Prices and Buyers

hay price buyers market sales

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#1 haygrl59

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Posted 20 January 2015 - 03:35 PM

I've been part of a hay operation in IL for about 2 years. I help produce the hay as well as market the hay. This year, we put up over 52,000 small squares of hay--straight alfalfa and grass mix. I've been watching the markets and have seen how certain markets (like the price of milk) will trickle down to affect the market price of hay. I also have customers that watch the prices of hay at auctions and think that we should have comparable prices right out of the barn. My boss knows down to the penny how much it costs to produce a bale of hay (he's a numbers guy) and he isn't about to give the stuff away. He has a floor price for each type of hay we sell but I have been running into customers that want our bottom price or even lower. It doesn't help when other producers haven't figured the cost of production into their sale price and undercut the folks that are trying to make a decent profit. Our profit margin is only around 10% - 15% per bale. I have been talking with hay buyers from other states and they want to buy our hay but the freight costs will usually turn them away or they will ask us for a cut in the price of the hay to offset that. We can only come down so far. Perhaps they think since gasoline prices have dropped that other fuel prices must have dropped. All I know is that I am starting to see a trend of persnickety hay buyers (more so than usual) when it comes to large purchases. I understand, its a lot of money for hay and freight but when I average out the freight costs per bale it usually is around $1 to $1.50 per bale for a 200 mile delivery. We're hoping the weather becomes "more wintry" and that will increase the need for more hay. I guess its just feast or famine. I'm just wondering how everyone else is doing in selling their hay.


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#2 8350HiTech

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Posted 20 January 2015 - 03:40 PM

Maybe the person selling for less isn't undercutting. Maybe they produce it for less. Just a thought.

#3 Teslan

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Posted 20 January 2015 - 04:06 PM

Maybe the person selling for less isn't undercutting. Maybe they produce it for less. Just a thought.

A good thought.  But most of the time he is right.   

 

I've been part of a hay operation in IL for about 2 years. I help produce the hay as well as market the hay. This year, we put up over 52,000 small squares of hay--straight alfalfa and grass mix. I've been watching the markets and have seen how certain markets (like the price of milk) will trickle down to affect the market price of hay. I also have customers that watch the prices of hay at auctions and think that we should have comparable prices right out of the barn. My boss knows down to the penny how much it costs to produce a bale of hay (he's a numbers guy) and he isn't about to give the stuff away. He has a floor price for each type of hay we sell but I have been running into customers that want our bottom price or even lower. It doesn't help when other producers haven't figured the cost of production into their sale price and undercut the folks that are trying to make a decent profit. Our profit margin is only around 10% - 15% per bale. I have been talking with hay buyers from other states and they want to buy our hay but the freight costs will usually turn them away or they will ask us for a cut in the price of the hay to offset that. We can only come down so far. Perhaps they think since gasoline prices have dropped that other fuel prices must have dropped. All I know is that I am starting to see a trend of persnickety hay buyers (more so than usual) when it comes to large purchases. I understand, its a lot of money for hay and freight but when I average out the freight costs per bale it usually is around $1 to $1.50 per bale for a 200 mile delivery. We're hoping the weather becomes "more wintry" and that will increase the need for more hay. I guess its just feast or famine. I'm just wondering how everyone else is doing in selling their hay.

That's a lot of work and expense to only make 10-15% per bale.  If what you say is correct and if he is selling the hay for $5/bale he is only  making $26,000 a year?   I guess he must love making hay.  I'm sure you are selling for more then that per bale I would hope.   


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#4 NewBerlinBaler

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Posted 20 January 2015 - 04:09 PM

Haygrl59 - yours is actually a common gripe in this forum.   It may be the nature of the beast.

 

As I see it, there are two types of hay producers out there:

1) Large operations like yours where you're trying to earn a living.

2) Small timers who are actually in it more for the tax write-offs than to turn a profit.

 

The small producers typically have off-farm incomes and are just trying to keep product moving so they can show some revenue each year - and look legit.  Most probably don't really know (or care) what their cost of production is.

 

I'm one of these small guys and truth be told, it's not by choice.   It's sad but that's the crazy world we live in.   Here in Pennsylvania, if I didn't "farm",  I'd be taxed right off my land.   It's not just the property tax either.   If you're in agricultural production,  the IRS gives too many breaks to pass up.

 

Gary


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#5 rjmoses

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Posted 20 January 2015 - 04:42 PM

A lot of small producers don't figure their costs, lose money, and get out after a few years.  Sometimes they get desperate or panicky and feel they have to sell "NOW!"

 

I know what it costs me to produce a ton of hay;  I know what a bale weighs;  I know what I want as profit;  and I know what the current market price is based on auction prices.

 

From that, I set my limits.

 

Ralph

Bad business is worse than no business at all. 


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#6 haygrl59

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Posted 20 January 2015 - 04:55 PM

That's a lot of work and expense to only make 10-15% per bale.  If what you say is correct and if he is selling the hay for $5/bale he is only  making $26,000 a year?   I guess he must love making hay.  I'm sure you are selling for more then that per bale I would hope. 

 

Teslan, the hay operation is a side business for my boss. We sell 50 lb. bales from $4 - $8 a bale depending on the type of hay and the grade of hay (premium, good, economy). Basically, only 2 full-timers and 2 others are seasonal that run the operation, besides the boss. Business is picking up and more and more locals are finding our hay as it seems that the occasional hay producers are either not putting up much hay anymore or its a lower quality than what we offer (according to my customers).

 

 

As I see it, there are two types of hay producers out there:

1) Large operations like yours where you're trying to earn a living.

2) Small timers who are actually in it more for the tax write-offs than to turn a profit.

 

The small producers typically have off-farm incomes and are just trying to keep product moving so they can show some revenue each year - and look legit.  Most probably don't really know (or care) what their cost of production is.

 

I'm one of these small guys and truth be told, it's not by choice.   It's sad but that's the crazy world we live in.   Here in Pennsylvania, if I didn't "farm",  I'd be taxed right off my land.   It's not just the property tax either.   If you're in agricultural production,  the IRS gives too many breaks to pass up.

 

Gary

Gary, I hear ya on this. It is a sad and crazy world and one has to do what one has to do to survive. It is the nature of the beast.


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#7 somedevildawg

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Posted 21 January 2015 - 08:35 AM

A good thought.  But most of the time he is right.   
 

That's a lot of work and expense to only make 10-15% per bale.  If what you say is correct and if he is selling the hay for $5/bale he is only  making $26,000 a year?   I guess he must love making hay.  I'm sure you are selling for more then that per bale I would hope.


I'd be willing to bet that's about right Teslan.....if I made 50k a year, that's about what I would net.....pathetic isn't it
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#8 rjbaustian

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Posted 02 March 2015 - 05:54 PM

Im in the same boat kinda....Trying to make a go of this, so I can leave my full time job and farm full time.  Luckily my wife has a really good job, so all I have to do is make the measley paycheck I bring in now, and I can do it lol...Anyhow, Im going after quality hay, which in my area, seems rare...I may be cutting my own throat here, but Id switch to big squares if I were you.  Small squares are a niche market that's great when you have buyers, but when you don't, they seem to be hard to get rid of.  At least that's what Im finding out.  Lucky for me, I made mostly large rounds this year, and just a few small squares...this year I finally bought a big square...



#9 rjmoses

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Posted 02 March 2015 - 06:13 PM

From what I'm seeing recently, the hay market is softer hereabouts so far this year than it has been in the last 8-10 years.

 

Ralph



#10 somedevildawg

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Posted 02 March 2015 - 09:21 PM

Very strong here right now.....lots of cattle and horses and a poor year for hay making last year combined with more row crops = high demand
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#11 PaCustomBaler

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Posted 03 March 2015 - 08:06 AM

I hear you haygrl.  It's hard competing against the smaller hobby farms that undercut the price for a the smaller loads of hay.  They have 200-400 bales in their barn and cut a price down low on it just to get rid of it.  When someone asks if I can do a little better on price, I'll tell them $.25 more a bale than the price it was...this usually stops the "chew down" process haha.  And like you said, price of gas went down but nothing else came down so why should your prices come down?

 

I've always been told that if you don't get every sale (from phone calls, emails, etc.), then your price is right.  If you making every sale from every person that contacts you, then price is too low.  Not sure if that's the right way to look at it, but it's a ol' salesman's quote.


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#12 hog987

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Posted 03 March 2015 - 09:37 AM

Iam at the point right now I get three phone calls. Two people complain about my price and the third guy buys everything I had on my ad. Than I work at getting it loaded and delivered. Put up an other ad with a price increase and same thing happens. Now if everyone takes what they wang I will be sold out. So there is no way I can lower my price for the winners when iam starting to turn down guys.
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#13 NDVA HAYMAN

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Posted 03 March 2015 - 10:39 AM

Prices are really high here with a lot of Pa. hay coming in. Small squares retail at $10 and 4x5 rounds at $50-100 each. Never before seen here. And then there is the fact that I am sold out except for straw. Go figure!


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#14 Vol

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Posted 03 March 2015 - 04:17 PM

Me too(out)....I wish I had another 3-4k...I could sell them this month locally.

 

Regards, MIke


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#15 hillside hay

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Posted 03 March 2015 - 04:25 PM

Prices on rounds are so low here that even the sheep people have gone to them. At 20-30 per bale they amazingly don't care about dust mold or weed count any more. In the l I'mong run with the extra waste are they saving anything? I don't know if they do. I do know I can't sell a round that low if it has any quality. Most of .y jockey buddies had to switch to alfalfa blends as their horsey people are switching from straight timothy and orchardgrass. No biggie. Buying cows to feed before I give it away
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#16 deadmoose

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Posted 03 March 2015 - 08:43 PM

Hay is low around here. I am hoping to have a bit extra or at least enough this year. If I hear any lower prices or fire sales in spring under $20 for a 4*5 I might buy some to carry into next year.
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#17 somedevildawg

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Posted 03 March 2015 - 11:22 PM

Hay is low around here. I am hoping to have a bit extra or at least enough this year. If I hear any lower prices or fire sales in spring under $20 for a 4*5 I might buy some to carry into next year.


There was a guy on here that was having a "fire sale" I think it was.......think they were 105# each with an average of 94# :o
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#18 hillside hay

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Posted 04 March 2015 - 08:01 PM

lol I almost forgot about that one 'Dawg


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#19 rjmoses

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Posted 12 March 2015 - 10:56 AM

Here's the local auction report for last week.  Of course, this is when I decided not to take any hay to auction!

Demand was moderate to good for heavy offerings. Prices were steady.

Receipts: 3314 bales         Last Week: 2607 bales      
         
Alfalfa                      Premium Quality          Comments
Small Squares                7.00-7.70 per bale
                                                                      
                             Good Quality              
Small Squares                5.00-7.00 per bale
Large Squares 3x3's          44.00 per bale
Large Rounds                 32.00 per bale     

                             Fair Quality
Large Rounds                 20.00 per bale

                             Utility Quality   
Small Squares                2.75 per bale
Large Squares 3x3's          31.00 per bale

Alfalfa-Grass                Premium Quality
Large Rounds 4x5's           43.00 per bale

                             Good Quality
Small Squares                3.50 per bale
Large Squares                44.00-59.00 per bale                                            
 
                             Utility Quality
Small Squares                2.00 per bale

Mixed Grass                  Premium Quality
Large Rounds 4x5's           40.00 per bale           Stored Inside

                             Good Quality 
Small Squares                3.00 per bale
Large Squares 3x3's          40.00 per bale

                             Utility Quality
Small Squares                1.75 per bale
Large Rounds                 24.00 

Doesn't it just figure.

 

Ralph



#20 hog987

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Posted 12 March 2015 - 12:09 PM

There is usually a two week cycle to the hay auction around here. First week prices are low. The sellers talk and say iam not going to bring any next week. The buyers talk about the good deals and next week they each bring a friend. Next week half the hay twice the buyers. Prices go up. Buyers go away saying its too high not coming next week. Sellers say wow look at those prices I better take a load or two in next week. Next week comes around twice the hay with half the buyers. Price of hay is low and cycle starts over again.
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