Drought, demand for ethanol responsible for high hay prices - 13 WTHR Indianapolis

Drought, demand for ethanol responsible for high hay prices

Anderson - Hay prices have increased this year because of summer's hot, dry weather and an increased demand for ethanol.

Corn prices have increased as demand rises for ethanol production, so some farmers are turning to hay instead of corn to feed their livestock. That means an increased demand for hay, which is already in short supply because of this summer's drought in parts of the country, agriculture officials said.

Matthew Chapman, who runs Chapman Brothers Custom Baling in Henry County, said his hay prices have at least doubled this year. His supply is so low that he'll probably be sold out by the end of October, he said.

"It's just supply and demand," Chapman said. "We have about one-third of the hay that we usually have."

The year began with a low hay stock, and a severe drought in the Southeast and parts of the Midwest has made the hay supply even shorter, said Jim Robb, an economist with the Livestock Marketing Information Center.

Indiana saw little rain this summer but areas in Kentucky and Tennessee have seen even less moisture. Robb said he doesn't expect hay prices to drop any time soon.

"We set a record high in 2006-07, and we're going to set another one this crop marketing year," said Robb. "We expect hay prices will set a record of about $115 per ton. And horse and dairy-quality hay selling for well over $150 per ton."

Ethanol production has also changed the market, Robb said. Corn which would normally have been used for livestock feed is now going toward fuel.

"The U.S. is very soon going to be processing more corn in the next few years into ethanol than we feed in the livestock sector," Robb said.

Sharon McNamee, who owns a horse and cattle barn in Anderson, said she has started getting hay for her animals shipped in from Wisconsin.

"Usually we grow most of our hay, but we didn't get enough rain this year," McNamee said. "Our hay crop, we probably got one-third of what we usually get."

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