The hay market has been struggling. Anticipated price improvements have yet to materialize and export demand remains slow. Alfalfa hay harvests continue across the West, with cutting schedules aligning with the five-year average.
Dairy demand for hay remains a mixed bag. Higher milk prices (up $3 per cwt year over year) should encourage purchases, but lower grain costs (corn silage prices are down 17% from 2023) are creating headwinds. Dairy quality hay prices have dropped 11% to 26% from 2023’s already low levels. While dairies are purchasing hay, resistance remains. Some dairies are switching to add more affordable almond husks into their feed rations, potentially reducing long-term hay demand.
Demand for feed quality hay may rise as fall pasture conditions are less than ideal due to hot, dry weather. Over 40% of cattle rangeland in Montana and Oregon is in moderate or worse drought conditions. California cattle ranchers experienced the hottest summer on record. This may lead these ranchers to pull cattle off pasture early and supplement their diets with hay.
International buyers are trying to cut costs as global dairy prices remain challenging, leading to price discounting by exporters and slowing sales as buyers wait for prices to bottom out. Alfalfa hay demand from exporters has been sluggish, though the timothy hay export market has been a bright spot. A smaller timothy crop due to reduced acres in Idaho and Washington, coupled with rain damage to some of the Idaho crop, has increased demand and boosted prices for quality timothy.
Profitability
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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