January 7, 2019

Northwest FCS News


Varied outlook in 2019 for Northwest agricultural producers


SPOKANE, Wash. (Jan. 8, 2019) – Northwest Farm Credit Services, the Northwest’s leading agricultural lending cooperative, 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 Snapshot reports are posted online at  Industry Insights.

Northwest FCS’ 12-month outlook for the agricultural commodities most common in the Northwest are summarized below.

Cattle – Northwest FCS foresees slightly profitable results throughout the beef industry as foreign demand increases. However, record cattle on feed inventory is expected to pressure feeder cattle prices and feeder margins lower. Dairies breeding with cheaper beef semen will add headwinds to producer profitability.

Dairy – The year for dairy looks slightly unprofitable. Futures markets suggest unprofitable prices through the first half of 2019 with increasing prices into the third quarter. Class IV milk prices appear positive as butter and powder inventories shrink. New farm bill policies favor small dairies while new crop insurance policies benefit all producers.

Fisheries – Fisheries should see slight profit margins over the next 12 months. Pollock and cod prices are strong and profits for these fisheries will be solid. Profitability for sablefish this season is subdued due to an abundance of small fish, which capture lower prices. Difficult halibut fishing conditions pushed costs up, cutting into profits. Salmon run forecasts are down, especially for Southeast Alaska’s pink salmon.

Forest Products – Both timberland owners and sawmill operators should receive profitable margins. Inventory at mills has filled, resulting in log and lumber price decreases. Still, log and lumber prices continue to generate positive returns. Demand for lumber from end-use markets remains strong and should keep prices in profitable ranges.

Hay – The next 12 months looks profitable for alfalfa and timothy producers. Fundamental supply conditions favor hay prices and producer profitability across the West. Abnormally wet conditions across much of the U.S. coupled with drought in Australia and Europe will provide tailwinds to Northwest hay sales.

Nursery/Greenhouse – The outlook sees Northwest nurseries as profitable over the next 12 months. The strong economy has bolstered plant sales and prices over the last few years. However, the strong economy has also created labor shortages, which pressure growers to increase workers’ wages. Plant inventory is starting to balance compared to shortages the last couple of years and retailers are starting to resist price increases from growers.

Row Crops

Onions – Onion producers should expect slightly profitable returns over the next year. Pricing for jumbo onions and larger will remain moderate amid higher yields. Market demand for medium onions will support increasing prices, giving producers with such a supply an opportunity to remain profitable.

Potatoes – The 12-month outlook reveals slightly profitable contracted potatoes and profitable uncontracted potatoes. Fresh market pricing should continue to improve as producers finish moving volumes that may have limited storage ability. Processor shortages across the U.S. and Canada will provide tailwinds to potato producers.

Sugar Beets – Expect profitable returns to sugar beet growers in 2019. Northwest sugar beet producers should benefit from strong yields, higher sugar content and lower ending stocks.

Tree Fruit

Apples – The 2018-19 apple crop is predicted to be profitable. This season’s crop is lighter than the last few years and fruit quality is favorable resulting in strong returns to growers. Although tariffs have decreased exports, the small crop is buffering the negative effects.

Cherries – Northwest cherry growers should see break-even to slightly profitable margins, depending on harvest timing. Cherry growers continue to experience a large, midseason supply glut that reduces profits while prices in the early and late seasons are more favorable. Little cherry disease was significant in 2018 and is expected to challenge production in the future.

Pears – Slight profits during the 2018-19 growing season are foreseen for pear growers. After three years of small crops, this season’s tonnage is finally solid. However, shipments are down dramatically due to subdued consumer demand and difficulty with marketing a crop that is almost 20 percent larger than last season. Fire blight was severe this season and growers who had increased mitigation costs or reduced yields will have subdued returns.

Wheat – Above-average wheat production should yield slightly profitable returns. Conversely, global supply is projected to decrease, favoring rising wheat prices. USDA’s projections suggest the 2018-19 season-average farm price for all-wheat will be between $5.05 to $5.25 per bushel.

Wine/Vineyard – All indications are Northwest wineries will be profitable due to stable sales and consumers continuing to trade up to higher-priced wines. Vineyard returns are pressured due to several years of large vintages creating oversupply in some areas and varieties. Wine sales growth is positive. However, most of the growth is driven by increases in value of wine sold and not increased consumption. In fact, wine consumption is flat, which is challenging the industry.

Other industry reports available from Northwest FCS:   CornCrop InputsLand Values and  Soybeans.

About Northwest Farm Credit Services
Northwest FCS is an $11 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.

NOTE: Brief audio highlights are available for each commodity listed above.


Deb Strohmaier, Communications Specialist