Pressure on hay market builds amidst weak demand

U.S. hay production remained relatively stable this year, posting a modest 0.8% increase compared to the previous season. Prices, however, have remained subdued reflecting heavy inventories and weak demand. Many regions report prices $5 to $10 below last year’s already low levels, with good-quality alfalfa hay averaging $130 to $170 per ton and grass hay ranging from $180 to $260 per ton. At the same time, input costs continue to weigh on producers. USDA Prices Paid Index climbed nearly 10% year over year in August, driven largely by higher fuel costs.

Domestic demand has been sluggish across much of the western U.S. Some hay growers have cut prices to move inventory, while others are holding stocks in anticipation of winter demand. Record warm fall weather and unusually late snowfall allowed ranchers to keep cattle on pasture longer, delaying supplemental feed purchases. However, a cold snap in late November is expected to boost winter feed purchases.

Exports have also been under pressure. August hay shipments fell 6% year over year, following a weak July that saw a 24% decline from 2024 levels. Many exporters continue to hold large alfalfa inventories. While China’s recent tariff reduction, from 34% to 10% on U.S. hay, offers some optimism, challenges persist. China’s shrinking dairy herd and price sensitivity limit upside potential for U.S. exporters. Japan and South Korea remain key buyers, but overall export volumes are well below historical norms.

Looking ahead, producers are cautiously optimistic that colder weather will lift domestic hay demand. However, high input costs, weak export activity, and heavy inventories suggest continued price pressure through early 2026. Strategic marketing and inventory management will be critical as growers navigate a challenging environment.  

Profitability

Hay (alfalfa): Breakeven profitability - Neutral 12-month outlook
Hay (timothy): Slightly profitable - Neutral 12-month outlook

Profitability is expected to stay under pressure as sluggish demand, weak prices, and cheaper alternative feed options weigh on alfalfa growers.

Timothy hay demand has improved recently, particularly in premium export segments, providing some price stability.