Northwest FCS News
FOR IMMEDIATE RELEASE
Most Northwest Ag Commodities Benefit from Strong Demand
SPOKANE, Washington (Oct. 5, 2022) – Northwest Farm Credit Services, the Northwest’s leading agricultural lending cooperative, has released its quarterly Market Snapshot reports covering the state of major agricultural commodities in the region. Northwest FCS teams throughout Idaho, Montana, Oregon and Washington monitor conditions and report outlooks for commodities financed by the co-op. All Market Snapshots and audio highlights are posted online at Industry Insights.
Northwest FCS’ 12-month outlook for the agricultural commodities most common in the Northwest is summarized below.
Apples – The 12-month outlook for apples expects breakeven conditions. Excessive heat in 2021 and cool, wet weather in the spring of 2022 will lead to a small crop. While demand remains strong, high-cost producers and packers with insufficient throughput may struggle. Crop insurance will be important for many growers.
Cattle – The cattle outlook suggests slightly profitable returns for cattle feeders and cow calf operators. Drought in major cattle producing areas has caused widespread liquidation and feedlot inventories set records twice throughout the summer. A smaller national herd and strong demand will support rising cattle prices in 2023.
Cherries - The 12-month outlook favors slightly profitable conditions for the Northwest cherry industry. Challenging weather conditions led to a very small crop, with weather more significantly impacting early season varieties. Crop insurance will help to offset weather-related losses. Stronger than expected consumer demand is supporting prices, but higher operating costs will pressure margins for many growers.
Dairy – The dairy outlook suggests profitable returns. Record milk prices in 2022 have outweighed feed cost increases. Recently, feed prices have been stable and hay prices have come down from highs experienced earlier in the year. Risk management tools can help producers protect profitability from production costs overtaking milk prices.
Fisheries – The 12-month outlook foresees fisheries being profitable. Solid harvest levels are being met with strong market demand and pricing across nearly all fisheries except snow and king crab. The season’s salmon run was successful, and Bristol Bay experienced a record catch. While not a major concern yet, rising input costs continue to pressure margins and raise the cost to repair and build vessels.
Forest Products – The 12-month outlook sees both forest product manufacturers and timberland owners as profitable. Lumber supply and demand is at, or approaching a balanced level, and prices seem to be settling above historical averages. Log prices have held up well this year.
Hay – The hay industry outlook suggests profitable returns. Strong demand, limited supplies and high prices will support profitability for alfalfa and timothy hay growers. Livestock producers who did not have enough production to feed the animals on their operations will face challenges finding hay available for purchase.
Nursery/Greenhouse – The profitability outlook anticipates profits for the nursery/greenhouse industry. Prices and demand are strong and have offset rising input costs. The industry faces headwinds, including container and material shortages, declining consumer wealth and home affordability. Fortunately, the customer base grew during pandemic lockdowns, which should support demand in the near term.
Onions – The 12-month profitability outlook suggests profitable onion returns. Additional heat units in July and August improved onion quality. Market demand is stable for all onion colors, with high demand for jumbos and larger. Producers with larger profile sizes will benefit from high prices and strong demand.
Pears – The 12-month profitability outlook anticipates slight profits for pear growers. The 2022-23 crop estimate came in similar to last season and early reports suggest good quality and a favorable, though slightly small, average size profile. Marketing strategies continue to evolve to meet changing consumer preferences. Input costs remain significantly above pre-pandemic levels and are pressuring margins. Inflation is eroding consumer wealth and may impact spending habits.
Potatoes – The outlook suggests slightly profitable returns for contracted potatoes and profitable returns for uncontracted potatoes. For contracted growers, profits were negatively impacted by lower-than-normal yields and higher bruising. Uncontracted growers were able to offset production and quality challenges with high open market prices and a solid price floor as processors were actively buying open market products.
Sugar Beets – The 2022 sugar beet crop outlook is favorable with profitable prices, yields and sugar content. Looking ahead to 2023, uncertainty around elevated fertilizer and chemical costs will weigh on producer profitability.
Wheat – The outlook anticipates profitable returns for wheat producers. Yields and protein levels are consistent with five-year averages. Rising input cost will narrow margins in 2023.
Wine/Vineyard - The 12-month outlook suggests profits for both vineyards and wineries. Wine grapes are healthier than previously expected, but two weeks behind maturity. In response, growers will delay harvest with potential risk if cold weather arrives early. Rising sales values have offset declining volumes. Early signs indicate persistently high inflation may begin to impact consumer behavior. Input costs remain elevated and packing material shortages have started to ease.
About Northwest FCS
Northwest FCS is a $15 billion financial cooperative providing financing and related services to farmers, ranchers, agribusinesses, commercial fishing operations, 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.