Arizona – Alfalfa hay trading has been slow due to scattered rains across the region, which caused some damage to hay crops. Sudan and bermuda grass were also affected, with some receiving rain damage that lowered quality to below export standards. Retail trends in the region are shifting toward big bales. Meanwhile, dairies in the area are switching to hay alternatives with California bringing in cottonseed and almond hulls to supplement their needs.
Water concerns for 2026 remain pressing as negotiations over Colorado River water allocations continue. Changes in the new agreement could result in reduced water availability for Southwest hay growers, potentially driving a major shift in agricultural practices.
The Colorado River irrigates over a million acres of farmland across the western U.S., including in California, Arizona, and Nevada (the Lower Basin). Irrigation water supplies in the Lower Basin are currently at risk due to negotiations over water allocations and ongoing drought. (The river’s two main reservoirs, Lake Mead and Lake Powell, are alarmingly low, standing at just 31% of their capacity.)
Colorado River water allocations are managed by an agreement among seven U.S. basin states, 30 federally recognized tribes, and the Government of Mexico. Current guidelines are set to expire next year. Negotiators have until Nov. 11 to reach a new operating agreement or risk U.S. federal intervention. To date, no consensus has been reached.
California – In the Imperial Valley, the closure of a sugar beet plant impacted approximately 25,000 acres. Area producers largely shifted to crops like bermuda and alfalfa, resulting in an oversupply of forage that may put pressure on prices. While hay prices for high-quality products could improve this winter, lower-quality hay prices are expected to remain sluggish. Water availability is stable but—as noted in the Arizona hay update—2026 Colorado River water guideline negotiations will be crucial for the region's agricultural future.
In the southern San Joaquin Valley, many growers are completing their sixth and final hay cutting of the season. Harvesting hay after Oct. 15 presents challenges, but there is optimism that prices for the sixth cut may improve.
Idaho – Hay conditions have improved throughout the season, and ample supplies are available. Sluggish demand from dairies and exporters is pressuring prices. Many hay growers face the decision to accept lower prices and sell their hay now or hold off in hopes of better prices this winter. Currently, drought conditions are worsening across the state, sparking some interest from ranchers looking to purchase hay.
Montana – Montana's hay growers endured a challenging season marked by unpredictable rainfall. Early dry conditions in the Hi-Line region limited production. August and September storms disrupted harvests, lowering hay quality in some areas and increasing grain hay supplies. Hay and straw prices have remained mostly stable.
Oregon – Hay production was strong, but summer thunderstorms created a tight harvest window. Weak demand and oversupply have kept prices low. While water supplies improved for the first time since 2019, concerns linger due to past droughts. Grass seed growers are struggling after an early harvest led to a light crop.
Washington – The fourth cutting of hay has shown lower quality due to damage from late-season rains. Export demand has been challenging. In Yakima, the hay market has been impacted by water challenges, with junior water rights being cut off as of Aug. 15. The U.S. has lost market share in Asia to Australia and Spain.
Profitability
Hay (Alfalfa): Breakeven profitability - Neutral 12-month outlookHay (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.
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