Outlook for Northwest Ag Commodities Neutral to Profitable

Published online: Oct 03, 2018 Articles
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Source: Northwest Farm Credit Services 

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 Snapshots are posted online at Industry Insights.

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


Northwest FCS’s 12-month outlook suggests grower returns will remain slightly profitable for uncontracted potatoes and profitable for contracted potatoes. Fresh market (uncontracted) potatoes may slip toward breakeven during harvest. However, uncontracted prices will likely improve for the remainder of the marketing season depending on crop quality and packout.


Sugarbeet growers should see profitable returns in 2018. Northwest sugar beet producers should benefit from lower ending stocks and sound sugar content.


Producers should see slightly profitable returns throughout the beef industry as domestic and export demand continues to soften the impacts of growing beef supplies. However, record cattle on feed inventory is expected to pressure feeder cattle prices and feeder margins lower.


Dairy profitability appears to be slightly unprofitable despite slight improvements in milk prices over the period. Normalization of trade with China and the USMCA agreement with Canada and Mexico could provide stability in the markets.


Fisheries should anticipate profitable margins this year. Prices for pollock, cod, halibut and sablefish remain favorable. The Bristol Bay sockeye salmon catch was the second largest in history and total ex-vessel values for all salmon species hit a record high. Chinese tariffs are causing headaches even though the effects on profits are limited for Alaskan fisheries so far. 

Forest Products

Timberland owners should expect very profitable returns and sawmill operators should look for profitable margins. Log and lumber prices have hit record highs this year. Recently, lumber prices softened due to lackluster housing starts in June and July and log prices cooled off after inventory build ups.


Alfalfa and timothy producers will likely be profitable. Fundamental supply conditions favor alfalfa hay prices and producer profitability across the West. However, uncertainty regarding trade looms. Resolution of trade disputes would benefit the hay industry as increasing milk price could support hay prices.


The nursery/greenhouse industry should be profitable. Strong economic factors continue to boost consumer confidence and their willingness to pay more for plants. Sales and prices have increased. However, the industry continues to struggle with labor and is looking behind every bush for solutions.


Onion producers may see break-even returns. Favorable weather conditions allowed harvest to begin at least one week earlier than normal in many areas. Prices remain subdued for yellow onions due to lower-quality onions from California in the supply chain. Red and white onions remain profitable.


Wheat producers should expect slightly profitable returns with above-average wheat production. Conversely, global supply is projected to decrease, favoring wheat prices. USDA’s projections suggest the 2018-19 season-average farm price for all-wheat will be between $4.70 and $5.50 per bushel. Trade uncertainties and the elevated dollar continue to constrain U.S. export competitiveness in the market.


Apple growers should look ahead to slightly profitable returns. Growers indicate the crop will be below the Aug. 1 estimate of 131 million boxes as many varieties are picking lighter than anticipated. Good quality and shorter supplies should result in high packouts and good returns to growers. Tariffs are a headwind. Even as tensions have cooled with the proposed trade agreement with Mexico and Canada, tariffs remain on the table for Washington’s third-largest export market, India.


Northwest cherry growers should anticipate break-even to slightly profitable margins, depending on harvest timing. After last year’s record crop, the smaller supplies were welcomed by growers. Good quality and strong consumer demand resulted in optimism for strong returns. However, tariffs complicated export markets and sales desks delayed finalizing pricing. As returns to growers are being finalized, many are below expectations. 


Pear growers should be slightly profitable. After four years of reduced tonnage, growers are warmly welcoming a large crop. The increased supply is pressuring prices. However, good quality should lead to high packouts and boost growers’ returns. Fruit size varies across varieties. Large-sized fruit will capture favorable prices, while smaller fruit is hard to market and prices will be pressured.


Northwest vineyards and wineries should capture profitable returns. Growing conditions were favorable this year and large crops are expected. Wine sales growth is positive, although low compared to prior years. Some regions and varieties could be facing oversupply due to larger crops and lower wine sales.