How are the key commodity markets faring in the Northwest? As with any report on the markets, there are good news and other news. Northwest Farm Credit Services, which covers Idaho, Montana, Oregon and Washington, offers a quarterly report with a snapshot look at conditions and an outlook for the near term.
Check out the commodity notes below to see the latest report:
Cattle. The 12-month outlook suggests profitability throughout the beef sector. Slaughter facilities are very profitable as they remain in a position of leverage over producers. Cattle feeders will be breakeven to slightly profitable, with variation based on risk management strategies. Cattle producers are expected to be slightly profitable, as strong demand for beef is coupled with peak cattle inventory.
Dairy. The 12-month dairy outlook anticipates slightly profitable returns in 2020. Futures markets suggest slightly profitable, stable milk prices in 2020. This comes as milk processors take a more active role in supply management.
Fisheries. The 12-month outlook expects slightly profitable margins for fisheries as a whole. Returns to sablefish fishermen will be subdued. The Pacific cod biomass is facing uncertainty, as studies are revealing fish moving north. The king crab biomass is also struggling and continues to face potential closure.
Forest products. The 12-month outlook calls for profitable margins for timberland owners and sawmill operators. Although log prices remain low compared to 2018’s peak, margins are profitable for timberland owners, and prices are expected to remain stable or improve. Processors have worked through high-cost logs from 2018, and lumber prices are slightly improving.
Hay. The 12-month outlook suggests alfalfa profitability will moderate, as producers intend to plant more acres in 2020. A large inventory of midgrade timothy continues to drive languid prices and weigh on profitability.
Nursery and greenhouse. The 12-month outlook expects solid profitability for Northwest nurseries. A strong economy will support stable housing demand, which will continue to sustain strong nursery sales. Growers secured price increases in recent years, and modest price rises are expected in the year ahead. However, growing labor costs remain a challenge for producers.
Onions. The Northwest FCS 12-month outlook on onions is for slightly profitable returns. Onion prices would be profitable, but given variability of pack-outs, returns vary by producer and growing region. International competition driven by the strong dollar will continue to favor imports, as domestic supplies remain low.
Potatoes. The 12-month outlook is for profitable contracted and uncontracted potatoes. An early cold snap froze as much as 15% of fresh market potatoes in Idaho. Other major production regions in the U.S. suffered the same fate.
Sugarbeets. The 12-month outlook continues to be profitable for sugarbeet growers for 2019-20, with a USDA forecast suggesting a drop in the stocks-to-use ratio from 14.5 (2018-19) to 13.5 (2019-20), a favorable ratio for Northwest sugarbeet producers.
Wheat. The 12-month outlook calls for breakeven returns. USDA’s projected 2019-20 season-average farm price for all-wheat is $4.80 per bushel, down 20 cents from last year. Variability in yield and quality will drive individual producer profitability.
Apples. The 12-month outlook anticipates slight profit for apple growers. The large crop has tempered prices. However, good fruit movement and continued trade agreement momentum should support prices in 2020. Varieties and quality continue to play a role in profitability.
Cherries. The 12-month outlook expects slightly profitable returns for cherry growers. Mild weather during the growing season resulted in good fruit quality. Strong domestic demand after major crop loss in California created strong markets for Northwest cherries, but pricing programs set earlier in the year tempered returns. Little cherry disease, which impacts fruit size and eventually kills the tree, is a growing concern for the industry.
Pears. The 12-month profitability index expects pear growers to break even this season. Lower-than-anticipated supplies have increased prices. However, prices don’t often make up for lost production. For growers with frost damage, low production issues are compounded. Increasing costs and lower consumer demand are making it difficult for the industry to generate profit.
Wine and vineyard. The 12-month outlook indicates slight profit for vineyards, while profitable returns are expected for wineries. Increasing wine values will benefit wineries. Vineyards without contracts will struggle to find opportunities to market their grapes away from the bulk wine market, where profits are minimal. Losses will occur for some Washington vineyards unable to harvest portions of their crops due to freezes.