here's some info I found on it
http://www2.ca.uky.edu/agc/pubs/agr/agr171/agr171.htm
In general, some loss in dry matter and quality is associated with these changes initially occurring after baling. A rule-of thumb useful in estimating yield loss of round bale hay is that 1 percent of original yield will be lost for each 1 percent moisture that is lost as stored hay reaches its equilibrium storage moisture. For example, if hay is baled at 20 percent moisture and then dries to 14 percent during storage, it will suffer a dry matter yield loss of about 6 percent.
Baling above 20 percent moisture without taking steps to reduce the microbial activity responsible for this heating may result in substantial quality loss. The extent of fungal growth during hay storage is a function of moisture content. Under normal conditions, the evaporation of water helps to dissipate heat generated by microbial growth on moist hay. The extent of heat damage can be assessed by looking at the color change during hay storage. Heating of moist hay causes a chemical reaction that fuses plant sugar and amino acids into an indigestible product called the Maillard product. Protein bound up in this process is called heat-damaged protein and is unavailable for animals. When hay heats sufficiently to cause a very dark brown to black color, its protein may be nearly indigestible.
Since heat movement in dry hay is slower than in moist hay, the movement of heat from the center to the outside of the bale slows down as the surface layers begin to dry. This causes the internal bale temperatures to increase rapidly after much of the surface moisture appears to have been removed. This can cause hay to catch fire due to spontaneous combustion if respiration and microbial heating raise temperatures greater than 170 degrees F. However, when spontaneous combustion occurs, it does not originate in the center of the round bale, but nearer the outside, because oxygen levels in the middle of the bale are usually too low for combustion to occur.
Dustiness in moist hay following storage consists largely of fungal spores produced during this microbial growth. Although numerous bacteria are present in hay, fungi account for most of the microbial growth during hay storage. Mold spores contribute to colic in horses and are responsible for significant economic losses to this important Kentucky livestock industry. Breathing spores of the fungus Aspergillus fumigatus during the handling of moldy hay can cause farmer's lung, a sometimes debilitating disease in which the fungus grows in human lung tissue. Hay with a significant amount of mold and mold spores can be used in cattle rations because cattle are less sensitive.
