AgWest Farm Credit Releases Quarterly Outlooks on 14 Ag Commodities
AgWest’s industry experts gather market information from various sources to deliver commodity-specific insights
AgWest is a financial cooperative with approximately $32 billion in total assets that provides financing, crop insurance and related services to farmers, ranchers, agribusinesses, commercial fishermen, timber producers and rural homeowners primarily in seven Western states. (Photo: U.S. Forest Service- Pacific Northwest Region, Public domain)
SPOKANE, Wash. — AgWest Farm Credit has released its quarterly Market Snapshot reports covering the state of major agricultural commodities in its northern region of Idaho, Montana, Oregon, Washington and Alaska. AgWest’s industry experts gather market information from various sources to deliver commodity-specific insights. All Market Snapshots are available at AgWestFC.com/industry-insights
AgWest’s 12-month outlook for specific regional agricultural commodities is summarized below:
Apples
The outlook sees apple growers as generally unprofitable and packers as profitable for the 2023 crop. Drivers include low prices for the 2023 crop, improving inventory movement to retailers, increased usage of Whole Revenue Farm Protection and expectations for a 2024 crop size aligned with demand.
Cattle
The outlook for cattle suggests profitable returns for cow-calf producers and slightly profitable returns for cattle feeders. The U.S. cattle industry is experiencing a significant decline, with the smallest herd since 1951, leading to tighter beef supplies and higher prices. Cattle producers are poised to see advantageous pricing and strong returns due to a reduced beef supply and strong domestic and export demand.
Cherries
The outlook sees Northwest cherry growers as slightly profitable for the 2024 crop. Drivers include damage from January freeze events, uncertain consumer demand and rising imports from Chile. Conversely, there is a reduced risk of overlapping retail shipments from California, Washington and Oregon, and disaster declarations in Washington and Oregon may support growers negatively impacted by weather events for the 2023 crop.
Dairy
The dairy outlook suggests slightly unprofitable returns. Drivers include a shrinking national herd and reduced milk production, which could increase milk prices in the latter half of 2024. The outlook for producers is bleak; despite decreasing feed costs and anticipated higher milk prices, it is unlikely that dairy farms will reach their breakeven price. Consequently, many dairies may operate at a loss in 2024.
Fisheries
The outlook sees fisheries as breakeven. Drivers include low prices, shifting pollock markets and production trends, several large processing plant closures, falling inventory levels for salmon, USDA purchases of Alaskan seafood and import restrictions on Russian seafood.
Forest Products
The outlook suggests forest products manufacturers and timberland owners as slightly profitable. Drivers include compressed lumber mill margins, tight log supply, declining demand from Japan, higher estimated taxes on Canadian lumber imports and strong timberland values.
Hay
The outlook for hay suggests breakeven returns for alfalfa and Timothy hay. The hay industry is experiencing a decline in domestic demand due to a shrinking cattle population, warmer winter weather and financial challenges in the dairy sector leading to lower hay prices. Hay exports dropped by 22% in 2023, with major international buyers reducing purchases significantly, further depressing hay prices.
Nursery/Greenhouse
The outlook sees the nursery/greenhouse industry as profitable. Drivers include strong purchase orders and plant growth, rising prices and rising existing home sales.
Onions
The outlook for onions suggests profitable returns. In 2023, Northwest onion growers faced a paradox of improved yields and reduced shrinkage but lower profitability due to decreased prices. While weather conditions favored crop growth, leading to a significant yield increase and less loss from shrinkage, the market prices for onions dropped sharply, negatively impacting grower income.
Pears
The outlook sees pear growers as breakeven to slightly profitable. Drivers include softening prices and declining export growth.
Potatoes
The outlook suggests break-even returns for contracted potatoes and slightly unprofitable returns for uncontracted potatoes. A large 2023 Northwest crop has brought uncontracted potato prices to below break-even levels. Some regions are having difficulties securing potato contracts from processors, leading to fewer expected planted acres in 2024.
Sugar Beets
The outlook for sugar beets suggests profitable returns. Drivers include timely plantings and favorable weather which will benefit sugar beet production. Strong sugar prices have producers optimistic about the upcoming season.
Small Grains
The outlook for small grains and pulse crops suggests slightly profitable returns. Global price drops and favorable U.S. weather have further depressed wheat prices. Producers will have to diligently manage elevated operational costs with lower wheat prices.
Wine/Vineyard
The outlook sees wineries as slightly profitable and vineyards as breakeven. Drivers include excess wine supply in Washington and removal of uncontracted acres, winter damage in some growing areas, mixed Direct-to-Consumer sales, a large crop in California and declining imports.
About AgWest Farm Credit
AgWest is a financial cooperative with approximately $32 billion in total assets that provides financing, crop insurance and related services to farmers, ranchers, agribusinesses, commercial fishermen, timber producers and rural homeowners primarily in seven Western states. AgWest is part of the 108-year-old Farm Credit System – the leading provider of credit to American agriculture. For more information, visit AgWestFC.com.
–AgWest Farm Credit
