Even with the record high prices for retail hay in the desert Southwest, demand has remained good. Buyers from the Los Angeles area and Eastern horse regions are still active in the market. This year’s monsoon season was wetter than normal, and many growers missed out on almost two cuttings with poor production conditions. At the same time, with high prices and good demand from the drought-stricken areas of Texas, growers sold a lot of hay as the season progressed rather than put it in storage.
Export demand through July was also strong, meaning more hay went into big bales. This resulted in less than the normal amount of small square, retail hay is available in barns. So, the question is at what price will we start to see some meaningful demand destruction? Several growers have said they are seeing some customers who normally only buy Premium quality switch to the more affordable No. 2 quality; however, the hay is still moving. There is starting to be some more resistance from Eastern buyers, but they will have to get creative to find an alternative source of alfalfa. Buyers may also switch to more affordable grass hays.
It feels like the market will hold until we get into the early season and get a better picture of what the water situation will be. In the Imperial Valley, some growers have been able to bale clipped alfalfa in small bales for the retail market. If the weather stays dry, I expect more to try and bale with prices over $400 at the farm.
Author of The Hoyt Report, providing hay market analysis and insight. Callen is based in Twin Falls, Idaho.