Hay & Forage

Hay is the great paradox of the commodity world: it is the third-largest field crop in the United States by harvested area, behind only corn and soybeans, with roughly 49 to 53 million acres cut each year and total production around 122 million tons in 2024, and yet there is no liquid futures contract anywhere on which to hedge it. A dairy farmer can lock in the price of the corn and soybean meal in a cow's ration on CME Group screens, but the alfalfa that makes up the rest of that ration trades only as physical bales in a regional cash market, priced off USDA hay auction reports and word of mouth. Hay is what a commodity looks like before financialization reaches it.

The reason is physical. Hay is bulky and low in value per ton, so freight is a large share of its delivered cost, which fragments the country into regional markets with wide and persistent basis. Quality is graded by relative feed value and color rather than a single objective standard, and export buyers in particular pay for a specific green that no exchange can define in a contract. The crop degrades in storage, loses color, and cannot be held indefinitely as a uniform deliverable grade. USDA does not even publish weekly cash-price reports for several major producing states. Every one of those traits, bulk, regional basis, subjective grading, perishability, defeats the standardization that a futures contract requires, which is why repeated proposals for a hay or alfalfa contract have never reached liquidity.

Almost all of the crop is fed close to where it grows. Beef cattle operations consume roughly 70 percent of US roughage and dairy cows about 18 percent, with horses, sheep, and goats taking the rest, and the overwhelming majority never enters formal trade at all. International trade is a thin premium slice, around 3.2 million tons, under 3 percent of US production, moving as compressed and dehydrated alfalfa and timothy hay to dairy and feedlot buyers in Asia and the Gulf. The United States dominates that export market, and the destinations, Japan, China, South Korea, and Saudi Arabia, are where the most interesting modern story in hay is being written: desert nations importing American water in baled form.

A first point of confusion is that hay is not a plant. It is a method. Hay is any forage crop, grass or legume, cut green, dried in the field, and baled for storage, so the word describes the preservation and not the species. Grass hay is made from grasses such as timothy, orchardgrass, brome, fescue, and bermudagrass. Legume hay is made from alfalfa or clover. Alfalfa itself is not a grass at all but a deep-rooted perennial legume, a relative of peas and beans, with a taproot that reaches many feet down and root nodules that pull nitrogen straight out of the air, which is why it carries far more protein, roughly 15 to 22 percent for dairy grade, than grass hay. Wheat is a different thing again: a cereal grass grown for its grain, the seed, rather than its leaves, although wheat and other cereals can also be cut young and dried as cereal hay. The umbrella word is feed, meaning everything an animal eats. Within feed, forage or roughage is the high-fiber plant material, hay, silage, pasture, and straw, while concentrates are the energy-dense, low-fiber feeds like grain and oilseed meal. Forage is a subset of feed, even though farmers often use the word feed loosely to mean the grain bucket.

Hay's long association with horses and with bedding is really two associations, and one of them is a mix-up. Bedding is properly straw, the dry, hollow, low-nutrition stalk left over after a cereal grain is threshed; it is cheap and absorbent and not worth feeding. Hay is the feed, nutritious enough to carry an animal through winter. The horse link, though, is genuine and historic. Before the internal combustion engine, cities ran on horses for haulage, transport, and delivery, and farms ran on draft horses and mules. The US horse and mule population peaked at roughly 26 to 27 million around 1915 to 1920, and a single large city like New York kept somewhere between 100,000 and 200,000 working horses around 1900, each needing many pounds of hay a day. Hay was, in effect, the fuel of the nineteenth century, and US hay acreage peaked at 78 million acres in 1944 before tractors and automobiles displaced the animals that ate it. That urban demand is why so many towns had a dedicated Haymarket, in London, in Boston, the Haymarket Square in Chicago of the 1886 riot, a physical square where bulky local hay was bought to feed local horses.

Grain never needed a town haymarket because it went somewhere else. Corn and wheat are dense, storable, high in value per pound, and fungible once graded, so they suited warehouses, merchants, and, from the founding of the Chicago Board of Trade in 1848, futures exchanges that traded grain by grade rather than by the bale. Hay is the opposite on every count: bulky, low in value per ton, variable in quality, and quick to lose color and feed value. So it stayed a local cash trade and never standardized into an exchange contract. The haymarket and the grain exchange are two answers to the same question, and hay got the older, more local one. It is the same set of traits that keeps hay off the futures screens today.

Hay does compete with corn, soybeans, and wheat for land, but less head-to-head than it once did. Much grass hay grows on pasture, hillsides, and ground too marginal for row crops, so it does not displace corn at all. Alfalfa on good ground does compete, but the decision runs on a longer clock: a stand is planted once and cut for three to five years, not replanted every spring. Alfalfa was in fact central to crop rotations for a century because its nitrogen-fixing roots, often adding 100 to 200 pounds of nitrogen per acre a year, fed the corn that followed. Cheap synthetic nitrogen fertilizer after the 1950s broke that bargain, let farmers grow corn on corn, and pushed alfalfa off general farms and onto specialized dairy and hay operations. Yields tell the rest of the story. US corn yields rose roughly six times since 1940, from about 30 bushels an acre to a record near 188 in 2025, on hybrid vigor, fertilizer, and chemistry. Alfalfa yields did not even double over the same span, from roughly 1.9 tons an acre at mid-century to about 3.5 tons today. Hay never had a hybrid revolution, attracted far less breeding money, and is harvested as bulky biomass that is hard to measure and select; even genetically modified Roundup Ready alfalfa, deregulated in 2011, sits on a minority of acres and carries a weed-control trait, not a yield trait.

Is hay as profitable as corn or soybeans? On prime row-crop ground, usually not. Alfalfa is input-, labor-, and equipment-heavy, with multiple cuttings, real weather risk while the cut crop cures, and an establishment year that yields little, so corn and soybeans tend to win. Established alfalfa can compete on dairy farms, where the hay is fed on site and never pays freight, and on marginal ground where corn struggles, but because hay is so costly to truck relative to its value, its profitability is intensely local and cannot be quoted as one national number. That leaves the last question: why feed cattle hay at all when they are already eating grain? Because grain and forage do different jobs. Cattle are ruminants, and the rumen needs physically coarse fiber to work. Forage keeps the animal chewing, which produces saliva that buffers the rumen, holds the pH up, and prevents the acidosis and bloat that an all-grain diet causes. Even grain-finished feedlot cattle get a roughage component, roughly 10 to 15 percent of the ration, and dairy cows need forage fiber to hold up milk butterfat. Forage is not a cheaper substitute for grain; it is a physiological necessity that grain cannot replace. A cow fed only corn would get sick.