2019 outlook for Northwest ag producers remains varied
July 11, 2019
SPOKANE–Northwest Farm Credit Services has released its quarterly Market Snapshot reports that look at the state of major agricultural commodities in the region. Northwest FCS industry teams working throughout Idaho, Montana, Oregon and Washington monitor conditions and report outlooks for commodities financed by the co-op.
All Market Snapshots are posted online at Industry Insights.
Northwest FCS’ 12-month outlook for the agricultural commodities most common in the Northwest are summarized below.
Modest returns are projected throughout the beef industry. Trade negotiations and feed costs continue to fuel uncertainty in the market. Increasing feed costs will narrow feedlot margins and transfer into lower calf prices this fall.
Futures markets suggest slightly unprofitable to break-even milk prices through the first half of 2019, with increasing prices for both Class III and Class IV milk for the remainder of 2019.
Fisheries should realize profitable returns over the next 12 months. The “Wild Alaska” pollock branding continues to increase consumer interest for new products, resulting in higher prices for the biggest Alaskan fishery. Cod prices are softening but remain high compared to historical averages. Bristol Bay sockeye salmon is gearing up for another valuable catch.
Despite declines in early 2019 log prices, timberland owners are expected to be profitable through the year. Only modest profits are expected at mills as they work through higher-priced contracted log inventory and lower pricing for their lumber.
Alfalfa and timothy hay producers should be profitable. Low inventory and improved dairy profitability bode well for prices, despite lower export volume to China.
Nursery and greenhouse operators should see modest gains in sales growth. Stable housing starts and positive consumer sentiment should keep demand for nursery/greenhouse products solid. Inventory buildup could create headwinds.
Profitable returns are projected for onions over the next 12 months. Yield expectations are muted by delayed planting and cold weather in the Treasure Valley. In contrast, near-ideal growing conditions in the Columbia Basin offset late planting. Producers with remaining 2018-19 inventory will enjoy very profitable returns late in the 2018-19 shipping season.
Profitable returns are anticipated for contracted potato producers. Frost in eastern Idaho on June 9 and 20 foreshadow lower yields and higher uncontracted potato prices.
Sugar beet producers in Idaho should see profitable returns. In Montana, a cool and wet start to the growing season delayed sugar beet maturity.
USDA’s projections suggest the 2018-19 season-average farm price for all-wheat will be $5.10 per bushel. Prices received can vary greatly depending on local basis prices. Low pulse crop prices will depress overall producer profitability.
Slightly profitable returns are expected over the next 12 months for apple producers. A large 2019-20 crop is anticipated, which will need to rely more heavily on export markets. However, trade tensions with Mexico, the U.S.’ largest export market, remain elevated.
Cherry growers will see slightly profitable returns for the 2019 harvest. Rains destroyed a large portion of California’s projected record crop, leaving retailers eager for cherries. Early season Northwest cherries are getting strong prices. However, supply will flood the market around the Fourth of July (similar to past years) and compress margins for mid-season cherries.
Lackluster demand for pears is compressing growers’ margins for the 2018-19 season despite higher yields and great quality. The 2019-20 crop is estimated to be 9% below last season, which should increase prices. However, increased costs from labor and fire blight will cut into returns.
Slight profits are projected for Northwest wineries and vineyards. Headwinds for wineries include increased bulk wine inventories, competition from other alcoholic beverages and changing consumption trends. Vineyards will continue to be pressured in a high-supply environment.
Northwest FCS is a $12 billion financial cooperative providing financing and related services to farmers, ranchers, agribusinesses, commercial fishermen, timber producers, rural homeowners and crop insurance customers in Montana, Idaho, Oregon, Washington and Alaska. Northwest FCS is a member of the nationwide Farm Credit System that supports agriculture and rural communities with reliable, consistent credit and financial services. For more information, go to northwestfcs.com.