Northwest agricultural markets see some bright spots
After a spring of challenging weather, the outlook for major agricultural commodities in the Northwest varies, with the majority of producers looking at slightly profitable results, according to Northwest Farm Credit Services. The company, which describes itself as an $11 billion financial cooperative with customers in in Montana, Idaho, Oregon, Washington and Alaska, provided the following highlights for Northwest agriculture on July 11.
Hay inventories have decreased since 2016 but remain above the 10-year average. Export markets rose in the first four months of 2017, increasing 21 percent. Drought conditions in eastern Montana will tighten supplies and raise prices in the area. Alfalfa prices have remained depressed, leaving only slight profit margins for growers. Tight supplies of timothy have strengthened prices. Northwest FCS’ 12-month outlook is for slightly profitable returns for alfalfa growers and very profitable returns for timothy growers.
Cooler weather has delayed and reduced the length of the onion growing season, which could dampen yields and quality. The National Onion Association’s April report indicates mixed to low demand for much of the second quarter. The Northwest FCS 12-month outlook is for slightly profitable returns.
Low supplies of quality, fresh-packed potatoes are pushing up prices. The cool, wet spring will likely lead to lower yields for early dug potatoes. Contracted potato growers continue to see slight profitability. Uncontracted growers are likely to remain at below break-even levels.
Wheat acres are the lowest ever recorded by the U.S. Department of Agriculture. Dry conditions in June followed the wet spring planting season across the Northwest. Early planted spring crops fared well, taking advantage of available moisture. Conversely, late-planted spring crops have been challenged by above-average temperatures and drying conditions. Low prices and variable crop conditions are leaving many growers below break-even.
Apple packouts for 2016 are being affected by quality issues in storage. However, prices in general are increasing slightly. Reds, Galas and other less domestically desirable varieties are finding relief in the export markets. The industry anticipates that the 2016 crop will clean up before the 2017 harvest. The apple industry is profitable due to favorable prices for new varieties and a strong export market.
California’s record-size, good-quality cherry crop created a smooth transition to the Northwest crop, which is estimated at a record 24.5 million 20-pound boxes. Due to the cold spring, the peak of the season is later than the typical Fourth of July holiday. Although storms have occurred in areas across the Northwest, no significant damage has been reported.
The percent of the 2016 pear crop shipped to date is lower than the last five years due to weakened exports and lower domestic demand. The 2017 crop is estimated at 17.6 million 40-pound boxes, which is smaller than the 2016 crop. The Bosc pear crop in particular is expected to be very small due to bloom issues. This may positively impact demand for other varieties. Overall good quality for the 2016 crop has kept producers profitable.
A cold, wet winter and spring are pushing the wine/vineyard industry back to normal growing conditions compared to recent years. Although some producers were subject to freeze and other winter damage in the vineyard, the broader wine industry outlook is positive entering the summer growing season. The wine industry is strong, with sales growth of 3 percent year over year, and the direct-to-consumer segment is still cranking out double-digit sales growth.
Cattle producers are expected to be slightly profitable in 2017. A short-term supply shortage drove prices for all classes of cattle higher during the first half of the year. An influx of slaughter cattle later in the summer is expected to drive prices lower than a year ago. Global markets for beef are positive, with double-digit year-over-year growth and recent access to China’s $2.5 billion market. Overall, cattle producers are expected to be slightly profitable for the next year.
By Post-Register Staff