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Hay updates
Hay prices remain low.
Hay producers face a difficult operating environment marked by low prices, higher-than-normal inventory levels and increased operating debt. To move inventory, some growers are selling hay at discounted prices.
In the Northwest, demand for hay has improved in both export and domestic markets, but buyers remain price sensitive. Muddy conditions in many areas of the Northwest are driving increased purchases for straw. In Montana, significant February snowfall spurred hay purchases. Irrigation concerns may further improve demand for hay in north-central Montana. Delays in the St. Mary Canal project may lead to partial or no irrigation water deliveries through July (depending on runoff).
In the Imperial Valley area of California and Arizona, first cutting has started, with hot weather providing ideal conditions for high-quality hay. Anecdotal reports suggest fewer alfalfa acres will enroll in the Deficit Irrigation Program (DIP) this year. (Producers can enroll alfalfa, Bermuda grass, or Klein grass in DIP, avoiding irrigation for 45-60 days in exchange for a $300 per acre-foot conservation payment.) Enrolled alfalfa acres are now facing weed issues and challenges with the first cutting, leading some producers to reconsider re-enrollment. Bermuda and Klein grass did not face the same challenges.
Given prevailing supply and demand dynamics, producers expected modest price gains, but do not anticipate major increases for at least another year or two unless a severe drought occurs. This will require producers to closely manage input costs and implement risk management strategies.
Profitability
March 12, 2025
Hay (Alfalfa): Slightly unprofitable - Neutral 12-month outlook
Hay (Timothy): Slightly profitable - Neutral 12-month outlook
Sluggish demand has kept alfalfa prices low. While potential improvements in milk prices and weather conditions could offer some relief, prices remain below breakeven levels.
Timothy producers will benefit from increased export demand.
