Economic Analysis & Publications

Kub’s Den – Hay Bales: High Priced Time Capsules

Originally published on 6/28/23 by DTN at Hay Bales: High-Priced Time Capsules (

If I were a poet, I would write a poem about hay. It would convey how profoundly memories can be affected by scents, and the way dried prairie grass can be a magical form of time travel. Even in the middle of a February blizzard, when the cattle’s water tank is frozen and your face is whipped raw by the wind and everything seems miserable, the sunshine and honey aroma of a late-June morning can still hit you from inside a dry hay bale, cracked open and delivered straight to your nostrils and your brain. Time and memory are preserved like a bouquet of dried yellow blossoms inside the previous summer’s hay.

In some senses, all dried or preserved food has this quality — pickles, jerky, beans. They’re all little time capsules from the moment when the food was fresh, to the moment in the future when they are consumed, however far in the future that may be. But there is something about the palpable contrast of the outdoor environments in which we create and use hay — baling hay on a hot summer day versus feeding hay to livestock in a rotten winter storm — that make it that much more powerful.

Not only powerful, but also expensive these days. On a recent trip to Colorado, I saw small square alfalfa bales priced at $10 per bale in the field (and presumably much higher than that delivered or purchased at retail). Assuming 65 pounds per bale, that puts the alfalfa over $300 per ton. In today’s world, where the price of nearly everything — but especially labor — has rocketed higher with inflation, this shouldn’t be too surprising.

It’s also born out in official data from USDA’s Agricultural Marketing Service across a range of states — Nebraska and Kansas have alfalfa trades and asking prices ranging from $230 to $300 per ton. Missouri’s hay harvest is seen at about 70% complete and, with large pockets of extreme drought across the state, mixed grass rounds of good quality are running $150-$200 per ton, or 60% higher than last June’s range of $80-$140 per ton.

All across the nation, hay supply seems to be lighter than hay demand after drought has limited grass yield and condition. There’s a widespread area where long-term drought is ongoing, specifically a cloud stretching north and south and east from Omaha. But there are also dominant hay-producing areas farther west that may have received enough rain recently to relieve drought, but which were quite dry earlier in the grass-growing season (i.e., Texas and Oklahoma or Montana and the rest of the Mountain West).

The most recent weekly Crop Progress report shows only 44% of the nation’s pasture and range in good or excellent condition, and 24% in poor or very poor condition. Now, that doesn’t seem so bad compared to last year’s 43% poor or very poor at this time in the season. However, when you consider that a lack of happy grass affects not only the availability of hay that’s been cut and baled, but also the underlying yearlong demand for hay when grazing supplies are short, we can see why hay prices have been climbing and why both buyers and sellers are fierce negotiators this summer. In Texas, 43% of pasture and range is still poor or very poor. In Illinois, it’s 46%. And in Michigan, a full 68% of pasture and range is classified in those grim categories.

A chart of hay prices over a photo of large round hay bales

A long-term series of hay prices isn’t well-tested every week and may seem volatile due to trades of varying quality and terms. (Chart by Elaine Kub)

To be sure, the overall condition ratings have been improving compared to last year and especially after recent rains. But hay prices can be sticky once traders get a number in their head, like $200 per ton for prairie hay in large rounds. There’s no perfect long-term series of hay prices to show exactly how the market shifts from week to week, because it’s not a perfectly standardized commodity with the same interchangeable substance being tested every week. In any given location, there may be varying quality from one trade to the next, or varying delivery terms. However, plain, good-quality prairie/meadow grass baled into large rounds in Nebraska are about as standard and well-tested as the hay market gets, and the psychological benchmark for these bales seems to have risen from $100 per ton in 2021, to $150 per ton at the start of 2022, to $200 per ton once the dry conditions and willingness of the market became clear.

There is no price to put on memory, especially happy memories, and no price to put on perfect June days. But in a world of scarce supply and ever-inflating markets, there is definitely a price to put on hay.


Comments above are for educational purposes only and are not meant as specific trade recommendations. The buying and selling of grain or grain futures or options involve substantial risk and are not suitable for everyone.

Elaine Kub, CFA is the author of “Mastering the Grain Markets: How Profits Are Really Made” and can be reached at or on Twitter @elainekub

Kub’s Den – Cows More Profitable Than Corn Under Which Circumstances?

Originally published on 6/14/23 by DTN at Cows More Profitable Than Corn: Under Which Circumstances? (

Projections for annual cow-calf returns to reach in the hundreds of dollars per head in 2023 and 2024 are enough to make a person sit up and start shopping around for heifers. But is it enough to make someone dig out their old seed drill and replant some quarters to grass? Recall how producers tore up sod and converted grassland to cropland during the ethanol boom of the late 2000s (…) — is it time for the reverse to occur?

Steers coming through sale barns in Nebraska and South Dakota this month at about 600 pounds are reliably seeing prices above $260 per hundredweight, and the strong futures market through the end of this year suggests that by the time this spring’s calf crop hits the sale barns later this year, they too can expect favorable prices.

For argument’s sake, let’s say each calf’s value will be $1,560 (600 pounds times $2.60 per pound), but raising them requires $961 in annual cost per cow-calf pair, depending on various assumptions about ownership, interest costs, mineral programs, local grass leasing costs, etc.

That results in a very generous $599 annual profit per pair. Broken out per acre of production, the way corn or soybean budgets present their economic situations, this is equivalent to $101.83 in profit per acre, assuming we’re looking at a region where it takes about 5.88 acres to stock each beef cow-calf pair for six months (0.17 pairs per acre, or about 27 pairs per standard 160-acre quarter-section pasture).

The density at which you can stock cattle on grassland varies greatly across the United States, from as few as 2 acres per beef cow in the Northeast and Lake States to sometimes as many as 50 acres per beef cow in the western Mountain states. Land values vary accordingly, so the profitability estimations made here shouldn’t be considered representative of every cattle operation everywhere.

However, it’s this “transitional” Cattle Country region that’s particularly interesting (using 5.88 acres per pair), because this is characteristic of the places with a climate and soils that can justifiably go either way — to crop production or pasture grazing.

For instance, think of places like Walworth County South Dakota on the east side of the Missouri River, for instance, or Sheridan County Nebraska with both farming and sandhills topography, or the rolling hills of Johnson County Missouri. These are all places where, depending on a given field’s attributes, the land could be deployed either to stocking beef cattle at roughly this rate, or potentially growing 150 bushels per acre (bpa) of corn or 39 bpa of soybeans.

There is a broad swath of Cattle Country that has faced this choice over time — to enlist the land into producing either crops or cattle. Should these fields grow corn on somewhat marginal ground, requiring investment in expensive machinery and inputs? Or should they grow beef animals on grass, requiring investment in barbed wire and labor?

It’s finally this year — when the cattle supply has been squeezed so low by drought — that the math really starts to get interesting, because most crop prices also remain relatively favorable. Let’s see how they stack up in this example region:


155.5 bpa at $4.83 new crop cash bid = $751.07 revenue this fall

PROFIT: $57.94 per acre



38.6 bpa at $11.48 new crop cash bid = $443.13 revenue this fall

Minus $413.01 cost of production per acre

PROFIT: $30.12 per acre



63.4 bpa at $7.40 new crop cash bid = $469.16 revenue this summer

Minus $615.30 cost of production per acre

LOSS: -$146.14 per acre



0.17 pairs per acre at $1560 per calf = $265.20 revenue this fall

Minus $163.37 cost of production per acre

PROFIT: $101.83 per acre


Charts of profitability overlaid on a photo of a red heifer in a farm pasture

Your mileage may vary, and all these assumptions require a lot of wiggle room for real-world productivity. They also don’t necessarily represent reality for farmers in the I-states, where cattle operations may exist specifically to be an outlet for corn, or in the South, where prices may not be as high or drought may drive up forage values, or in the Mountain West, for that matter, where the alternative to pursue row crop production doesn’t really make any sense.

Nevertheless, just about any way you slice it, cow-calf operators are, for once, in the nice position of actually being able to pencil out $100 or $200 or more in profit for each mama cow they care for. Not all grain producers can say the same for each acre they’ve planted in 2023.


Comments above are for educational purposes only and are not meant as specific trade recommendations. The buying and selling of grain or grain futures or options involve substantial risk and are not suitable for everyone.

Elaine Kub, CFA is the author of “Mastering the Grain Markets: How Profits Are Really Made” and can be reached at or on Twitter @elainekub

A Crude Connection Between Grains and Geopolitics

There are some clear and certain ways the war in Ukraine is affecting grain prices, like the cutoff of wheat and corn shipments from Black Sea ports, the uncertainty about spring planting in that region or fertilizer availability in coming months, and the volatile activity in futures prices when traders holding short positions get squeezed or forced out by margin calls.

Then there are some less certain ways the situation is adding to the wild bullishness, like the rumor that the European Union might consider importing GMO corn from the U.S. and South America, or whatever else might be the rumor of the day.

And, finally, there are some indirect, circuitous paths for the crisis to affect grain prices for producers in the United States. There are European natural gas prices to consider and the loss of Russian fertilizer exports to the global market; in addition — more subtly — the shipping companies that now refuse to take bookings to or from Russia, relieving some of the pressure on the global supply chain and ocean freight prices. But the big one, of course, is oil.

President Joe Biden announced Tuesday the United States will ban imports of oil or natural gas from Russia. As DTN Senior Market Analyst Troy Vincent points out, Russian oil amounted to 7.9% of total U.S. oil imports last year, and “while U.S. refiners and blenders can get by sourcing this oil from elsewhere, it will come at a higher cost. The lack of Russian crude on the global market will likely mean lower refinery utilization in Europe, which portends lower availability of refined fuels for importing to the U.S. East and West coasts.”

So, it’s not necessarily that this country (or much of the rest of the world) will have to cut back on total fuel usage; consumers will just have pay more for all types of fuel — fuel oil, diesel fuel, gasoline, and, yes, ethanol, our climate-friendly, domestically produced alternative that now gets to demand higher prices alongside everything else.
Corn and crude oil prices are linked together for a number of reasons. Both markets are denominated in U.S. dollars and both are bought and sold together as part of the overall “commodity” sector to diversify investors’ portfolios or hedge against inflation. But most of all, they are linked because they are effectively substitutes. No, you can’t eat oil, but yes, you can use corn to make your car go. When one market spikes, the other also spikes, and when one lags, the other tends to lag, too. Sometimes corn can have a unique market movement without affecting the price of fuel much or the price of crude oil at all — for instance, think of the 2012 drought, during which oil prices stayed flat — but never the other way around. Any time fuel prices rise, corn ethanol prices and corn prices themselves participate in a similar rally.

Nearby WTI crude oil futures have already traded above $130 per barrel this week. But what if there’s more of a price spike yet to come? The all-time highest price tag ever traded for the front-month crude oil futures contract was $147.27 back in the summer of 2008. In today’s dollars, that would be equivalent to $180 per barrel. Similarly, the April 1980 spike in nominal crude oil prices to $39.50 per barrel would be equivalent to $137.10 in 2022 inflation-adjusted dollars. So, U.S. consumers have already experienced what it’s like to pay for fuel when energy values are this high.

Notably, those past spikes kicked off eras of demand destruction when people balked at the prices and drastically scaled back their consumption; but those were also troubling economic times for other reasons. During the financial crisis, consumers who lost their homes probably would have scaled back on energy consumption no matter what commodity prices did. Today is different. Right now, our economy is growing and the financial sector isn’t in the middle of a crisis. The Russian oil ban and higher energy prices are a somewhat isolated variable, setting up a natural experiment that has never been tried before. Don’t shoot the messenger, but this time, consumers may be perfectly able to keep paying for fuel at never-before-seen prices for a more extended period of time. History may not be a very reliable guide.

These same questions must be asked for corn, while its chart spikes higher alongside oil: What prices are consumers able to bear? And at what price level will demand be destroyed? History has offered a few demonstrations of corn prices above $9 per bushel in 2022-equivalent, inflation-adjusted terms: the mid-2008 spike, plus a series of peaks from 2011 through 2013 — none of which boded well for the profitability of corn end users, like livestock feeders and international food and energy customers.

In some sense, it feels like the die has been cast and the energy charts, including the chart for corn, are virtually destined to keep exploring these high price levels. Then the remaining question will be, given all the upcoming challenges of drought or input availability or wider war or whatever else is coming next, when will they come back down?

Elaine Kub, CFA, is the author of “Mastering the Grain Markets: How Profits Are Really Made” and can be reached at or on Twitter @elainekub.

(c) Copyright 2022 DTN, LLC. All rights reserved.

The History and Future of High Fertilizer Prices

Alarming record-high fertilizer prices in December 2021 don’t seem quite so bad when compared apples-to-apples to 2012 highs, or the really grim times of the 1850’s Guano Age.

“Peruvian guano has become so desirable an article to the agricultural interest of the United States that it is the duty of the Government to employ all the means properly in its power for the purpose of causing that article to be imported into the country at a reasonable price. Nothing will be omitted on my part to accomplishing this desirable end.”
— President Millard Fillmore in his Dec. 2, 1850, State of the Union Address, promising to bring down the market price of bird poop.


In fact, President Fillmore devoted 100 words of his 1850 State of the Union address to the topic of bird droppings, over 1% of the entire speech, alongside talk of international canals and railroads that would advance global commerce. The topic of manure — any type of manure — was a very big deal in those days, and these days, too. Farmers today can sympathize with that high-consequences attention to the topic of fertilizer and devote at least that much scrutiny to record-high prices today.

Back in 1850, there was no such thing as synthetic nitrogen fertilizer, and if anyone ever wanted to get better than 20 bushels per acre of corn, farmers had to use whatever natural fertilizer they could find — farm animal manure, sure, but also kitchen waste, sawdust, dead animals, sludge from wetlands; you name it. In the “Guano Age,” a powerful global industry had sprung up to mine giant mountains of desirable bird poop off the coasts of Peruvian islands (and elsewhere), yet there still wasn’t enough supply to meet demand. Seabird guano reportedly hit a high of $76 per pound^ in 1850, or a quarter of the price of gold. (…)

That’s so expensive, it’s beyond comparing to today’s common agricultural fertilizers. Assume you can get 70 pounds of nitrogen per ton of seabird guano (3.5% nitrogen), similar to some poultry litter available today, and it shows anyone actually buying guano at $76 per pound was paying over $2,000 per pound of nitrogen. There’s no way this could have been a widespread market price paid by the average American farmer, but nevertheless, today’s anhydrous ammonia at $1,314 per ton (or $0.80 per pound of nitrogen) doesn’t seem so bad!

To be sure, the prices for nitrogen-based fertilizers are as high as they’ve ever been. The DTN Fertilizer Index, a weekly survey of over 300 retailer prices, showed dry urea averaging $873 per ton in the first week of December 2021. With 920 pounds of nitrogen provided to a crop from each ton of urea, that’s $0.95 per pound of nitrogen. With liquid UAN-32 fertilizer priced at $661 per ton and 640 pounds of nitrogen available from each ton, that’s $1.03 per pound of nitrogen — now the highest price for nitrogen since the Guano Age.

In year-over-year terms, dry urea prices are 143% higher than in early December 2020, but looking at a longer timescale, today’s urea prices are only 13% above their peak from the 2012 planting season. You can watch fertilizer prices rise week by week, like anhydrous, which has been rising by an average of 6% per week since October, in the DTN Retail Fertilizer Trends series by DTN Staff Reporter Russ Quinn:…

Nevertheless, it’s no wonder that many grain producers are looking for alternatives to high-priced synthetic fertilizers. Although I don’t have access to a nice, long-term data series of manure prices from cattle feed yards, for instance, let’s assume the value of cattle manure today is at about $70 per ton. If it makes 5 pounds of nitrogen available per ton of manure, that’s equivalent to paying $0.18 per pound of nitrogen (and getting all the other minerals and benefits of organic matter for free). This would be by far the cheapest source of nitrogen, if it’s available to you and logistically feasible to apply. But just like the guano of the 1850s, there’s only so much to go around.

Interestingly, phosphate-based fertilizers remain cheaper now than they were during the commodity boom of 2008 (an N-P-K mix of 10-34-0 in November of 2008 was priced at $1,250 per ton but is now only $756). Altogether then, fertilizer prices shouldn’t seem quite as panic-inducing, as a one-year anhydrous chart (up 208% year over year) might strike us at first glance. It’s not some new, overwhelming, unmeetable demand for the stuff that’s causing the rally — rather, it’s the global shortage of nitrogen itself that is the driving force behind rising fertilizer prices.

Ever since German chemist Fritz Haber and metallurgist Carl Bosch figured out the famed Haber-Bosch process (1909) to artificially fix atmospheric nitrogen into the usable nitrogen of ammonia under high temperatures and pressures, the world’s supply of nitrogen has more or less depended on the world’s supply of natural gas. In commercial fertilizer production, natural gas is used not only as the source for raw hydrogen in the chemical reaction, but also to provide the necessary heat. Today, U.S. natural gas prices have come down from their September peak, but in Europe there is still massive uncertainty about receiving natural gas supplies from Russia amid current geopolitical tensions and some fertilizer plants remain shut down until natural gas prices moderate. For at least the next several months, the global outlook for fertilizer availability will remain as tense as the Russia-Ukraine border.

Just as a new technology (synthetic fertilizer production through the Haber-Bosch process) ultimately relieved the shortage of guano in the 20th century and made a golden age of agriculture and human prosperity possible, is there perhaps a new technology on the horizon that will alter our dependence on natural gas to feed the world? Researchers at Australia’s Monash University have recently announced a breakthrough new method to produce “green” ammonia* with a different catalyst than the Haber-Bosch process, at room temperature, at efficiency rates that may someday be commercially viable. (…)

In the meantime, until there’s abundant commercially produced green ammonia, if you’re unable to source the usual synthetic fertilizers necessary for spring planting at your local retailers, perhaps you’d like to consider something more old school, like this Mexican bat guano you can buy on the internet for $7.50 for a 1.25-lb bucket from a natural gardening outlet. (…)

That’s probably equivalent to $6.67 per pound of nitrogen, so maybe it’s better to stick with anhydrous. Anyway, even the bat guano is out of stock these days!


(c) Copyright 2021 DTN, LLC. All rights reserved. Originally published at: High Fertilizer Prices: The History and Future (

^Burnett, Christina Duffy. “The Edges of Empire and the Limits of Sovereignty: American Guano Islands.” American Quarterly 57, no. 3 (2005): 779–803.

*B. Suryanto, K. Matuszek, J. Choi, R. Hodgetts, et al, Nitrogen reduction to ammonia at high efficiency and rates based on a phosphonium proton shuttle. Science, 372, 6547, (1187-1191), (11 June 2021).