Western hay producers’ sentiment is low, with many struggling to achieve breakeven prices for alfalfa. National alfalfa prices have declined an average of $71 per ton from the previous year. Timothy hay stands out as a bright spot, fetching higher prices for export quality, though the overall export market remains weak due to slow sales and low international milk prices. China (a major destination for western alfalfa exports) has initiated a government program that encourages dairy to reduce their herd sizes, further dampening export demand.
Regionally, hay quality and yields vary. In eastern Montana, dryland hay production is down by 20% compared to last year, with variable quality and severe windstorms affecting some areas. Western Montana has seen yields drop by up to 50% due to hot, dry conditions and grasshopper infestations. Eastern Idaho reports slightly reduced yields with some rain damage, while southern Idaho faces lower tonnages due to vole and grasshopper damage. In Washington’s Columbia Basin, there have been minimal weather events leading to quality hay and good yields.
In California’s Imperial Valley, nearly two-thirds of alfalfa, klein and bermuda acres have been enrolled in a voluntary dry-up irrigation program (DIP – Deficit Irrigation Program). Producers will be compensated $300 per acre-foot of water saved by turning off irrigation for 45- or 60-day windows from August to October. While there are some concerns about DIP and the likelihood that some producers will need to re-seed, similar programs in the 1970s and 1980s suggest manageable long-term impacts. Producers believe that this temporary reduction in hay production will help boost prices in the Imperial Valley and surrounding markets.
Profitability
September 11, 2024
Hay (Alfalfa): Breakeven profitability - Neutral 12-month outlook
Hay (Timothy): Slightly profitable - Neutral 12-month outlook
Hay growers face mixed conditions. Weak export markets and weather-related yield issues pose challenges, but improving milk prices and a prolonged, cold winter could potentially boost hay prices and demand in the coming year.
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