“The market sometimes, or at least now, feels like we've gone from good, to difficult, to different. And I think one of the most significant things about the current hay market right now is that things are very different,” market analyst and hay exporter Scott Courtright told attendees at the California Alfalfa and Forage Symposium. “I'd say that some of the difficulty has gone away, but there's just a very different feeling to the market in general.” Courtright’s family has been in the hay export business for over 30 years and was in the cattle business before that. He said the current market situation is by far the most challenging one they have ever dealt with.
Courtright said there has been a significant increase in exports to the West Coast – exporters are trying to get ahead of the potential tariff threats and accompanying complications coming in from the Trump administration and a looming dockworker strike, which, as of the deadline for this article, has been averted by a tentative agreement between the dockworker’s union and the ports and shipping companies.
Supply chain update
Courtright gave three key points that affect the global supply chain: import volume, the disruption on the Red Sea and freight rates.
Import volume has been increasing, which is a positive for exporters as it results in more container availability to ship goods back to Asia. The peak season for imports is generally from the end of July through October when retailers are stocking up for the holidays. This also coincides with the largest agricultural export shipping period, from September through February. “Timing-wise, heavy imports coming to the U.S. gives us available containers to export agriculture goods and other things out,” Courtright said. Carriers charge a hefty head fee to bring goods from Asia. Exporters pay a backhaul rate that is perhaps 10%-15% of that when they ship things over to Asia. “A big import season is good and necessary for exporters like myself.”
The disruption on the Red Sea affects the Suez Canal, the largest trade lane in the world. Between October 2023 and March 2024, Houthi rebels attacked more than 60 vessels in the Red Sea, forcing ships to divert their courses and sail around the Cape of Africa. Asia-Europe routes used to take around 19 days prewar, but can now take up to 31 days depending on ship speed. This route change has turned out to be a positive for the exporting community, since the extra three weeks of shipping time has enabled carriers to utilize both their existing fleet and several new ships ordered to accommodate the increased volume of goods sent back and forth in the wake of COVID-19.
Freight rates for shipping across the ocean were also a concern before the change to trade routes. Shipping carriers were seeing an excess of capacity, causing freight rates to drop significantly to where they were no longer profitable. For example, a rate of $6,000 per full container was around $1,200. “If that disruption or the vessels having to go around changes, that'll change the rate structure and the logistic community for sure,” Courtright says.
Asian export markets
Japan is the largest importer of hay, buying roughly 500,000 tons of alfalfa each year, about 300,000 tons of timothy and yet more of other varieties of hay. The import volume has recovered somewhat from the low in 2023. Japan is currently importing about 85% of what it did five years ago. Courtright says the remaining 15% is likely gone, since the Japanese government has adopted new incentive programs to growers to promote more domestic feed production. It’s poor-quality forage, but very cheap, and a price U.S. hay could never compete with.
South Korea is largely a grass/straw market, primarily importing bluegrass, fescue, and perennial and annual ryegrass hay, along with the usual alfalfa and timothy. Its quota system is being phased out and should be completely finished by 2026.
China has been a significant change in the market. The price of raw milk to a dairy has been decreasing for 40 months straight. China has released data that says that in 2023, 60% of the dairy population was unprofitable. In 2024, that number rose to 80%. “It's like many things the Chinese government does – they massively overbuild,” Courtright says. “The first thing was the real estate market. They massively overbuilt it, then had a gigantic crash. It’s the same thing in the dairy market.”
Middle Eastern export markets
Saudi Arabia is a newer addition to the U.S. export roster. Most of its imported hay comes through a subsidiary of Almarai, the largest dairy group in Saudi Arabia, but other dairies are emerging that U.S. exporters have access to.
The United Arab Emirates has been a solid market for U.S. hay for about a decade, but other factors including a change of tender in its money and distribution system for the hay has somewhat complicated matters.
Other countries that are a potential market for the U.S. include Indonesia, Kuwait and other smaller Middle Eastern countries. India also has potential since it has a large cattle population that needs fed, and the Indian government granted approval for U.S. alfalfa about a year and a half ago. There are a few more hoops to jump through before those plans go any further, but Courtright is hopeful that once the regulations clear, India will be a very accessible market for U.S. hay.
