What drives alfalfa pellet prices?

Alfalfa pellet prices ride on the alfalfa hay market first. Everything after that is processing and freight: irrigation water, weather at cutting, the natural gas a dehydrator burns, the energy a pellet mill uses, and the truck. Pellets are hay that has been ground and compressed, so when hay gets expensive the pellet follows, usually with a lag while processors work through what they already bought.

Start with the hay

Alfalfa is grown for its own sake, which separates it from most of what trades on this board. DDGS, gluten meal and the mill feeds are co-products, made in whatever volume the primary product dictates. Alfalfa acreage is a farmer's decision, taken against corn, soybeans and, in the irrigated West, against every other crop competing for the same water. So supply responds to price the way a crop should, over a season rather than a week.

Water is the constraint that decides how much of it there is. The dehydrated and sun-cured pellet trade runs out of irrigated country, the high Plains and the Western valleys, where a field gets more cuttings than rain-fed ground allows and each cutting depends on an allocation. A short irrigation season cuts tonnage before it does anything to demand. Weather at harvest matters separately: rain on a windrow bleaches leaf and costs protein, and leaf is where most of alfalfa's protein sits.

Sun-cured and dehydrated are two different products

USDA quotes them separately, and a reader comparing prices needs to know which one is on the screen. Sun-cured pellets are field-dried hay, ground and pelleted, quoted at a 15 percent protein grade in Kansas and at Portland. Dehydrated pellets go through a dehydrator right after cutting, so the crop never sits in the field losing carotene, and they are quoted at a 17 percent grade out of Nebraska. The dehy product costs more to make and it usually sells for more.

The grade number in those quotes is the protein spec, and it is what the buyer is contracting for. A 17 percent dehydrated pellet and a 15 percent sun-cured pellet are not the same feed priced differently. They are different feeds.

Energy runs through the processing cost

Dehydration is a gas-fired operation. A dehy plant pulls moisture out of fresh-cut alfalfa in a rotary drum, and when natural gas is expensive that cost lands in the pellet, which is one reason the dehy grade can widen against sun-cured without anything happening to hay. Pelleting adds electricity and die wear on top. None of this touches the hay market, and all of it touches the pellet price.

Freight is the last piece. A pellet is dense, which is the whole point of making one, so it ships better than baled hay per unit of nutrition. That is exactly why export buyers and horse owners a long way from alfalfa country buy pellets in the first place, and it means the delivered price in a distant market carries a freight component that can move on its own.

Who is bidding

Horse owners are the visible buyer, and they buy on consistency and shelf life rather than on a cost-per-nutrient calculation, which makes that demand less price-elastic than a dairy's. Export buyers take pellets and compressed hay for the same handling reasons. Dairies come in when hay is tight and a pellet pencils as fiber and protein together. Smaller outlets, rabbit and small-animal feed among them, buy alfalfa for the same reasons at lower volume.

Quality risk on the storage side is mold. Pellets that leave the mill too wet will heat and mold in a bin, so moisture control at pelleting is the standing quality question on this feed. Kansas State University Extension tabulates the alfalfa products among the forages for cattle.

Reading current market conditions

Everything above explains what moves alfalfa pellet prices. Reading where the market stands right now is a matter of watching a short list of USDA reports, not guessing.

The single most useful one publishes only once a year: USDA's Crop Production report released every May 1, known in the hay trade as the May 1 Stocks report. It counts the hay carried over into the new marketing year (USDA runs the hay year May 1 to April 30). Utah State University Extension found it the clearest annual signal for the alfalfa hay market underneath pellets: a big May 1 carryover has historically pointed toward a softer year for prices, a small one toward a firmer one. Between May 1 reports, the same USDA feedstuffs report this site's own alfalfa pellet series updates from every week carries the week-to-week price.

Export demand is the other item worth watching, and it moves on a lag. USU Extension's research found rising alfalfa hay exports lift prices, since export buyers compete directly with domestic dairies and horse operations for the same tonnage, but export figures run several months behind in USDA reporting. By the time a jump in exports shows up in the data, the market has usually already priced it in.

That is this week's actual move on this site's own tracked alfalfa pellet series: day over day, week over week and month over month. Read it alongside the May 1 Stocks report and export data above for the fullest live picture, and see the alfalfa pellets price page for the full chart and price history.

Worked example: reading the board

The chart above is the live alfalfa pellet board price in dollars per ton. One caveat on reading it against the rest of this site: alfalfa pellets are priced and tracked here but they are not scored on the nutrient-cost screening board, because no dry-matter-basis nutrient coefficient for them was verified against a primary extension or NRC table when this site was built, and we do not guess a coefficient to fill a gap. Alfalfa meal, which is the same crop ground rather than pelleted, does carry a verified coefficient and does get scored, so it is the closer reference point if you want a cost-per-nutrient number on the alfalfa side.

The Ration reports the USDA alfalfa pellet price as published, per ton, by grade and basis. It does not forecast where that price goes, and it does not tell a reader what to feed or at what rate.