In 2024, hay prices fell by more than 20% from the previous year with the average national hay price at $159 per ton. Prices are expected to remain low in 2025 due to high on-farm inventory levels and challenging demand. On-farm hay stocks in the West reached 10.4 million tons on Dec. 1, 2024. While this reflects a 6.2% year-over-year decrease, there is enough hay on hand for livestock producers to replenish feed inventories. Slow markets and mild winter conditions have reduced the demand for feed-quality hay in the West.
Dairies are slowly purchasing hay, which is competing with lower-priced feed alternatives like silage and almond husks. Improved milk prices should allow dairies to move away from purchasing hay strictly on an as-needed basis and feel more confident in making purchases as required. However, a smaller national herd (both cattle and dairy) will further reduce domestic hay demand. International demand has been sluggish. Despite expectations of increased sales in the winter, China hasn't boosted its hay purchases, likely due to governmental policies aimed at reducing their national dairy herd. Furthermore, a strong U.S. dollar has hindered export sales from other key international buyers.
As 2025 begins, drought and water availability are major concerns for hay growers. More than 48% of alfalfa acres are in drought, with weather forecasting models predicting drier conditions in the Southwest over the next few weeks. Persistent drought could impact hay production. A short hay supply could rally hay prices.
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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