Market woes stack up

Tariffs and weaker global demand have reduced U.S. hay exports, but recent trade data suggests this decline may be temporary. Hay exports dropped 26% year over year in May but showed a significant rebound in June, decreasing by just 7% year over year. China, a key buyer in previous years, decreased exports by 70% in May. However, June saw a significant boost to Chinese exports, up 44% year over year, a signaling potential relief for exporters.

As uncertainty around trade policy continues to weigh on the market, some buyers have turned to alternative markets. For example, competitive grass and straw prices in Spain have softened demand for U.S. hay. While many hope a trade deal could revive U.S. export volumes, underlying global demand is weak. Shifting buyer behavior is dampening prices and the current industry outlook.

Western hay prices, overall, are mostly stable but not at levels that support improved profitability.

Untimely rains across the western U.S. delayed harvest and impacted quality, tightening the supply of high-testing hay. In most areas, prices for premium grades, however, have leveled off, reflecting limited demand for high quality hay in the current environment. Although prices for lower-grade alfalfa are up $5 to $10 per ton compared to last year, this modest increase is not enough to ease the financial strain on growers. For many growers, the decision to sell hay now rather than holding out for higher prices that might not materialize reflects a need for immediate cash flow to sustain operations.

Arizona– Demand for hay remains light. Recent rain damage has slightly diminished hay quality. However, improving drought conditions across the state have been a positive development, with the prevalence of moderate to severe drought decreasing by 14% over the past three months.

California – Alfalfa hay trading is slow, with prices steady to slightly softer. Export grass saw improved demand. Dairy demand is mixed as weakening milk prices have led to a “wait and see” approach to hay purchases.

Idaho – Weather disruptions during the first cutting have resulted in a shortage of premium and supreme quality hay in Idaho. However, the second cutting shows better results, and prices for high-testing hay have risen as producers with top-quality hay hold out for higher returns.

Montana – Demand for hay has increased, driving prices upward across the state. The highest demand comes from drought-affected areas, particularly in northern and western Montana, where conditions continue to deteriorate. Meanwhile, recent rains in central and eastern Montana have improved pasture and hay conditions.

Oregon – Hay movement has picked up in mid-July, but demand remains slow to moderate overall. Drought-stricken regions have seen ranchers purchasing hay, preparing for the possibility of worsening conditions. Strong demand for grass straw on the part of ranchers has held prices steady.

Washington – Second cutting of alfalfa has seen weaker demand due to lower quality. The straw market remains steady, supported by strong demand. Exporters are still facing challenges; however, more international buyers are starting to secure purchases.  

Profitability

Hay (Alfalfa): Breakeven profitability - Neutral 12-month outlook
Hay (Timothy): Breakeven profitability - Neutral 12-month outlook

Slow exports and sluggish domestic demand have kept alfalfa prices low, posing challenges to profitability.

Exporters' increasing interest in timothy hay could boost grower profitability.