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Domestic Market – Statistics/Business.

4 Changes to Expect in the Domestic Hay Market in 2023

March 15, 2023


Hay is the third-largest crop in the U.S. in terms of harvest acres. In 2022, the total hay production in the U.S. was approximately 112.8 million tonnes. However, various factors have affected hay production in the last quarter of 2022, consequently affecting the domestic hay market. 

Understanding the domestic hay market changes can help you develop and implement sound strategies for producing and selling nutritional hay and thrive, despite the prevailing market conditions. This post will walk you through the expected changes in the domestic hay market in 2023. 

The Expected Changes in the Domestic Hay Market 

The key changes to look forward to in the domestic hay market include the following: 

1. Hay prices will increase

The average price of alfalfa hay ($277 a ton in September) was at a record high in 2022. The price of premium and supreme quality hay also reached a record high of $343 per tonne in August 2022. While some people were looking forward to the prices of hay declining, all signs point to the prices remaining high in 2023. 

For one, there’s the factor of reduced inventory. According to USDA’s May hay stocks report, there was a sharp decline in inventory. And while it wasn’t at a record low, it was getting close to that point. 

Domestic Hay Market - business graph analysis on notebook with hay texture background

Meanwhile, the forecasts by USDA showed that there would be a significant reduction in hay production. The decrease in production will be primarily caused by the drought that affected the southern and central plains in 2022. Generally, the drought condition has become somewhat normal and will keep the feed costs high. 

There are also logistical challenges of moving the hay from one point to another. Between the rising fuel cost and shortage of trucks and drivers, the expenses of transporting the hay also contribute to its high price. Both buyers and sellers will be affected by the high hay prices. 

2. Hay supply will be low 

Hay supply will remain short in 2023. The drought experienced in 2022 and the subsequent low hay production resulted in a low hay supply, and the effects will continue to be felt in 2023. 

The August 2022 Crop Production report released by USDA-NASS focusing on hay production in selected states showed that the total alfalfa hay production was 49.1 million tonnes, down 0.3% compared to 2021 levels.

All other hay production in 2022 was forecast at 67.7 million tonnes, indicating a 4.6% decrease year over year. The significant decrease in hay production will result in shortages in the supply of hay and feed price increases. 

3. Hay demand will increase

Four key factors will drive the demand for hay: shortage, exports, dairy, and substitute feeds. Hay shortage is expected to increase because of the use of domestic hay stocks. Still, it isn’t considered the most significant factor impacting the demand in 2023. 

Exports are another factor that will affect demand. U.S. forage and hay exporters sent over numerous metric tonnes of hay overseas, nearly two-thirds to China. It is expected that hay exporters won’t decrease their export quantities. As a result, low hay stocks will lead to high demand in the domestic hay market. 

The prices of substitute feeds will also affect the demand for hay. Suppose the prices of alternative feeds increase, so will the demand for hay because of the downward pressure that will be created on the current hay prices. But if their prices decline, we will see a slight decline in demand. 

4. The quantity of alfalfa hay will decline in the domestic hay market

Alfalfa Hay, grown, Baled

While the U.S. exports different types of hay, alfalfa hay is its biggest producer. Despite the low production of alfalfa, hay exporters will continue to export this commodity to China, Japan, and South Korea and even expand their market share in Saudi Arabia. 

As of June 2022, the total Alfalfa exports totaled 1.63 million metric tonnes. This was the third-highest export record, slightly behind the 2017 and 2020 totals. Alfalfa hay export was valued at $351 per tonne.

The high export rates of alfalfa hay are expected to continue in 2023 despite the lower production levels. And given the usually high export prices of hay, sellers prefer to sell outside the country rather than in the domestic hay market. This means that domestic buyers will scramble for the lower domestic hay stocks.  

That said, while understanding hay’s current supply and demand is beneficial to both sellers and buyers, it is still difficult to predict how prices will behave in 2023 with certainty. Hay prices were high in 2022 and may remain high in 2023, but there might be a slight decline in pricing later in the year. 

Besides understanding the domestic hay market, producers should know the cost of production, keep seasonal price movement in mind, know break-even prices, and know who has the market leverage. 

Despite the global economic uncertainty, the inflationary environment, and low overall hay production, the current hay domestic market may change for the better, and 2023 could still prove to be a profitable year.  

Boost Your Hay Production with the Right Equipment 

The equipment you use in your hay production determines the quality and quantity of your output. At B&D Rollers, we have the ultimate hay conditioning rollers. Our universal crusher rollers optimize hay baling, significantly reduce dry down and enhance relative feed value for added quality and profits. Contact us to learn more about this equipment.

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