Cattle cycle, dairy pressures shape outlook for hay market recovery in 2026

PASCO — As hay growers navigate one of the toughest pricing environments in years, economists and exporters at the Northwest Hay Expo say the future of the hay market is increasingly tied to the cattle sector. With dairy margins tightening, beef numbers still historically low and export demand only beginning to recover, producers are preparing for another year of narrow margins, but signs of optimism are emerging.  

Cattle herd remains historically low 

National cattle numbers have fallen significantly in recent years, the result of sustained drought in the central and southern plains, high feed costs and producers taking advantage of record calf prices to liquidate aging cows. At the Expo, AgWest Farm Credit analyst Amber Roberts told growers that rebuilding the herd will take time. 

“Optimistically, rebuilding could begin as early as 2026,” Roberts said. “But more realistically, we’re looking at 2027 or 2028 before we see any significant upward trend.” 

She added that while the national herd is shrinking, the Pacific Northwest is positioned to rebound sooner than other regions.  

“The PNW simply wasn’t hit as hard or as long by drought. When rebuilding begins, this region will likely lead the way,” she said. 

Still, for hay growers, the lag in cattle expansion means slower recovery for feeder‑grade hay prices. With many producers switching to cheaper rations and stretching forage supplies, the feeder hay market remains saturated, a problem that could persist until cattle numbers rise. 

Dairy sector under pressure  

Dairy markets, once a dependable driver of high‑quality alfalfa demand, are also shifting. Roberts noted that dairy producers nationwide are facing lower milk prices, rising replacement heifer costs and tightening margins. In China, a large buyer of U.S. alfalfa, dairy profitability has fallen so sharply that national herd numbers are declining.  

“Chinese milk prices are now well below their cost of production,” Roberts said. “Their big dairies are cutting back, and that has directly reduced their imports of U.S. alfalfa.”  

Domestic dairies are also altering rations. Some producers are feeding less alfalfa and relying more on alternative roughage or lower‑priced hay.  

“I’ve heard from growers in multiple states that dairies are pulling back on alfalfa and shifting rations to cut costs,” Roberts added. 

This shift disproportionately impacts growers targeting premium grades, where dairy demand has historically held prices above feeder hay. 

Export markets  

For Western hay growers, exports have long been the economic anchor. But shipments to key markets – especially China, Japan and Saudi Arabia – dropped sharply in 2023 and 2024, driven by high U.S. prices, a strong dollar and reduced foreign demand. 

Exports in 2025 were still down nearly 19% year‑over‑year through October, Roberts said. Shipments to China alone fell more than 20%.  

That collapse hit exporters hard.  

“Exporters have been really, really suffering and struggling,” said Mike Davidson, president of the National Hay Association. “In 2023 especially, everyone was losing money.”  

But Davidson said the downturn appears to be bottoming out.  

“Demand is finally picking back up. It’s harder to find good quality hay. When that happens, prices follow.”  

High‑quality hay 

Multiple exporters echoed a similar theme: while feeder hay remains abundant, high‑testing alfalfa is increasingly scarce. 

“Good quality is getting tougher to find,” Davidson said. “Export buyers are back, they’re sampling, and they want quality. That’s where the price recovery will start.”  

Eckenberg Farms forage buyer Chris Prochet agreed, saying his company relied more heavily on its own acres this year to secure high‑quality supply.  

“We were fortunate to have our own crop,” he said. “Other outfits had to buy outside hay, and that was tough with the economy and the market the way it is.”  

Economists at the Expo reiterated that the hay sector’s strongest near‑term opportunities lie in producing top grades. With cattle numbers low and dairies cost‑cutting, feeder hay prices may remain soft,  but premiums for exportable alfalfa could rebound faster. 

Recovery will be slow, but it’s coming 

Despite the challenges, both economists and exporters maintained that the hay market is not entering a structural collapse, rather, a cyclical downturn from which it will recover. 

Davidson, who has farmed and exported hay since the 1980s, said the industry has weathered downturns before.  

“Economics 101 means there will always be supply‑and‑demand cycles,” he said. “Prices go down and they come back up. Better times are around the corner.”  

Roberts urged growers to plan conservatively but not lose sight of the bigger picture.  

“Cattle rebuilding, dairy stabilization and export shifts all take time,” she said. “But when they align and they will, demand for hay will strengthen again.”