Hay prices remain challenging

Alfalfa hay prices started the new crop year lower than the previous year, increasing financial strain on hay growers and signaling the likelihood of low prices throughout the year. Western alfalfa prices are on average $5 to $10 per ton lower than 2024’s prices. Growers facing cash flow challenges have been selling more hay, further contributing to the decline in prices.

In California, lower-priced feed alternatives have reduced hay demand, while favorable weather conditions have led to increased hay production and improved quality. An abundance of corn silage has further driven prices down. In Arizona, despite deteriorating pasture and range conditions over the summer, drought has not yet spurred significant hay demand from livestock producers, and this demand has yet to translate into higher prices.

USDA has released its estimate for the 2025 hay crop, projecting national production to remain stable at 49.7 million tons. However, there is speculation that this estimate may overstate the number of alfalfa acres harvested, as some producers removed acres after the first cutting due to weakening demand in the hay market.

In Arizona, hay production is expected to rise by 5.5% from 2024, driven by strong yields. Meanwhile, production in Idaho and California is anticipated to remain steady. Oregon and Washington are projected to experience slight declines, as these markets have been more significantly impacted by softening export demand. Montana is forecast to see a notable 19.1% increase in hay production, largely due to improved yields and a modest expansion in harvested acres. Conversations with Montana producers indicate that several have had to cut more wheat hay this year due to challenging harvest conditions. Many areas of the state have experienced unusually high levels of rainfall.  

Profitability

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

Lower hay prices, driven by higher production, weaker demand, and cheaper feed alternatives, continue to challenge grower profitability. However, there is growing optimism that prices have bottomed out and may rebound in the coming year.

Increasing exporter interest in timothy hay could boost grower profitability.