MIXED OUTLOOK ON DROUGHT DYNAMICS
SPOKANE, Wash.—Drought conditions across most of the country are impacting market dynamics for Northwest growers. The rising cost of corn and soybeans is negatively impacting the beef and dairy industries, but is supporting strong prices for Northwest hay growers. Dry conditions in the Northwest adversely impacted wheat yields in south and eastern Montana, and are now challenging winter wheat planting and germination across the region. Meanwhile, the expectation of record breaking crops for apple and wine grape growers is being met with strong demand. The slow U.S. economy continues to hurt forest product and nursery sales. Both industries have seen some improvement, but sustainable recovery requires a rebound in the housing market.
Increases in planted acres, and excellent yields, have resulted in a larger than expected Northwest potato crop. While, growers with contracted potatoes remain profitable, open (i.e. non-contracted) potato prices are below the cost of production. Low open potato prices, paired with high feed costs, have made potatoes an alternative feed source for cattle producers in 2012/13. Despite low domestic prices, the export market remains a bright spot for potato producers.