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LOOKING AHEAD: The outlook from Northwest Farm Credit Services shows that farmers in the region have the potential to produce a profit in 2019 — or in the case of dairy, break even.

Northwest ag producers face volatility

The quarterly ag outlook from Northwest Farm Credit Services offers insight into the changing financial picture.

Just how will different ag segments of the Northwest fare in the rest of 2019? A quarterly look at key market indexes from Northwest Farm Credit Services offers a look at some of the key factors facing the industry. While cattle look good, the dairy market may also see a bump in the second quarter. On the crop side, there’s good news for hay, onions and potatoes.

Check out the snapshots below; if you want more information, visit the Northwest FCS Industry Insights webpage.

Cattle. The Northwest FCS outlook suggests slightly profitable returns throughout the beef industry, bolstered by strong domestic and foreign demand. Stagnant growth in the national cow herd favors higher prices. Additional winter feed costs will hinder profitability.

Dairy. Futures markets suggest unprofitable prices through the first half of the year. Higher prices in the latter half are expected to offset first-half losses. Northwest FCS anticipates breakeven returns for dairy in 2019.

Fisheries. Fisheries should realize profitable returns over the next 12 months, according to Northwest FCS. Healthy biomass for halibut and sablefish means higher harvest levels. Demand for pollock is strong, and so are prices. Bristol Bay sockeye salmon should see another highly profitable year.

Forest products. Log and lumber prices are expected to increase slightly and remain stable throughout 2019. Northwest FCS anticipates profitable returns for timberland owners and slightly weaker margins for processors over the next 12 months, even with price declines from record log and lumber prices in 2018.

Hay. Northwest FCS’ 12-month outlook suggests alfalfa and timothy hay producers will be profitable. Low supplies across the Northwest are setting the stage for strong profitability in 2019.

Nursery and Greenhouse. Prices remain strong. Still, some indicators point to a softer housing market, which could negatively affect demand. Northwest FCS expects nursery and greenhouse operations will be profitable in 2019.

Onions. Northwest FCS foresees profitable returns to onion producers in the next 12 months. Wet weather in February and March provided ample water for the 2019 growing season, but delayed planting.

Potatoes. Northwest FCS anticipates lower production and inventory, leading to higher prices. Contracted potatoes will likely be profitable, and uncontracted potatoes are projected to be slightly profitable. Delayed planting foreshadows a smaller crop in 2019.

Sugarbeets. Northwest FCS predicts profitable returns to sugarbeet growers for the 2018-19 crop. Northwest sugarbeet producers should benefit from lower ending stocks.

Wheat. USDA projects the 2018-19 all-wheat price will be between $5.10 and $5.20 per bushel. Northwest FCS predicts this price should allow slightly profitable returns for producers.

Apples. Northwest FCS expects slightly profitable returns over the next 12 months for apple producers. Prices have increased, and producers anticipate modest returns for the remaining 2018-19 crop. With no trade resolutions in sight and more fruit expected, next season’s margins could be thin.

Cherries. Cherry growers could see compressed returns if Chinese tariffs remain in place for the 2019 season. Northwest FCS predicts early- and late-season cherries will capture higher returns due to lower supply. However, supply gluts are anticipated midseason, which will subdue producer returns.

Pears. Lackluster consumer demand leads to Northwest FCS’ 12-month outlook of slight profits. Subdued shipments result in soft pricing, despite high quality. Labor and disease management continue to increase costs.

Wine and vineyard.  Northwest FCS’ 12-month outlook calls for profitable wineries and slightly profitable vineyards. As more consumers reduce their alcohol consumption and turn to substitute beverages, growth in wine consumption is slowing. Still, consumers continue to trade quantity for quality, which is increasing the value of wine sales. Increased labor costs and abundant grape supplies challenge the vineyard industry.

Source: Northwest FCS. The source is solely responsible for the information provided and is wholly owned by the source. Informa Business Media and all its subsidiaries are not responsible for any of the content contained in this information asset.
TAGS: Management
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