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Posted on Oct 20, 2017

Northwest agriculture markets showing some profits

Several weeks into the fall season, the outlook for major agricultural commodities in the Northwest varies, but the majority of producers are logging small profits, according to Northwest Farm Credit Services.
The wine sector is benefiting from strong demand, and on the down side wheat growers face drought conditions and competition in the global marketplace from Russia’s record crop.
Northwest Farm Credit Services, which describes itself as an $11 billion financial cooperative with customers in Montana, Idaho, Oregon, Washington and Alaska, provided the following highlights for Northwest agriculture on Oct. 5.

Hay producers are operating slightly above break-even margins. A low supply of high-quality hay is leading to higher hay prices. Producers look forward to higher prices as supplies continue to tighten. Year-over-year U.S. hay export volume increased 25 percent in the first seven months of 2017.

Persistently high prices, due to limited supply and solid demand, are keeping the industry profitable. Higher median household income, positive consumer sentiment and steady housing demand should continue to bolster sales. However, labor constraints are reducing growers’ ability to expand production.

Onion grower returns are projected to be profitable. Early fall onion sales met strong demand, creating favorable early season prices. Questions surrounding onion yields and quality contribute to the higher prices, which are likely to remain throughout the marketing season.

Contract potatoes are expected to be slightly profitable throughout the season. Uncontracted potatoes may slip toward breakeven during harvest but are expected to be profitable later in the season. Growers report average yields for early harvested potatoes despite late planting.

Early reports for the 2017-2018 crop shows strong demand and pricing. Washington’s crop is projected to be the third largest on record. Smaller crops in other U.S. growing regions and across the globe provide good marketing opportunities for the Washington crop this season. Domestic demand is stable, and a weaker U.S. dollar compared to recent years will boost export demand.

This season’s Northwest cherry crop set a record at 27 million 20-pound boxes. Cherry growers with pre-Fourth of July product are profitable due to a smooth transition from California’s crop and manageable supplies leading to favorable prices at the start of the season. However, growers supplying cherries to the market post-Fourth of July will likely see losses, especially if coupled with small fruit size or quality issues. Many blocks with small, undesirable cherries were not picked in the glut of the season.

Profit margins for pear producers are expected to be narrow this season. The total Northwest crop is projected up 2.3 percent from the prior year. However, production is still below historical levels. The Bosc crop is down 19 percent this season compared to last year due to a light bloom with significant reductions in the Yakima growing region. The smaller crops of the last few years left growers with lackluster, but decent, profits.

Wheat growers are expected to be slightly below breakeven due to continued low prices and variable crop conditions. Drought conditions troubled growers across the region, especially in eastern Montana. The U.S. Department of Agriculture’s 2017-2018 forecast all-wheat price is between $4.30 and $4.90 per bushel.

Good quality and average to slightly reduced yields are expected for Washington and Oregon. Idaho’s yields are significantly reduced due to severe winter damage. Solid profits for the wine industry should continue as a result of positive consumer trends and strong wine sales. Total U.S. wine sales are up 6 percent year over year. The direct-to-consumer marketing channel continues to provide opportunities to wineries, growing 18 percent compared to last year.

Cattle producers are expected to be slightly profitable. Strong calf prices are fueled by strong demand and growing beef exports. Producers who market calves in the fall have a profitable opportunity as prices rally.

By Post-Register Staff

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