Ouch on those hay prices! We put up our own and luckily had a decent year. I've seen ads on CL, straight alfalfa squares are going for around $4 and tim/orchard squares $3. Round bales about $30, but we've had a wet year so I wouldn't trust the round bales for horses at all.
I haven't been to Shipse to the auction since they rebuilt after the fire. I'm not surprised at the prices though at all. That area was hit hard with the economy crash with all of the people who worked in the RV industry. I can remember hearing on the news when the elkhart/goshen area's unemployment rate hit 20%. I'm curious what prices have been like at the draft auctions in Topeka.