Increased hay production and improvement to drought conditions heading into 2025 does not bode well for hay prices. National hay production increased by 3.8% year over year to 126.8 million tons. Both alfalfa hay and all other hay production increased, up 8.1% and 5.8%, respectively. For producers in the Northwest, hay production remained stable at 16 million tons, while growers in the Southwest had a 13.2% year-over-year increase. Greater hay inventories are putting downward pressure on already low prices. As a result, the national alfalfa price fell by 24% from the previous year.
Trade across the West has been sluggish, with prices remaining stable. Export demand might increase if international buyers become concerned about potential tariffs and decide to stock up on hay. However, export buyers are expected to wait and see if prices drop further. Seasonally, prices tend to fall in December or January. Demand from dairies and feedlots has also been light. Demand from cattle producers was expected to improve due to the harsh drought outlook this fall. However, as drought conditions continue to ease across the U.S., especially in the West, hay prices will likely see continued pressure in 2025.
Profitability
Hay (Alfalfa): Breakeven profitability - Bearish 12-month outlook
Hay (Timothy): Breakeven profitability - Bullish 12-month outlook
Weak export markets and a strengthening U.S. dollar pose headwinds, but improving milk prices and a prolonged, cold winter could potentially boost domestic demand and support stronger prices in the coming year.
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