FOR IMMEDIATE RELEASE
Northwest Ag Commodities Experiencing Varied Impacts of Coronavirus Pandemic
SPOKANE, Washington (July 1, 2020) – Northwest Farm Credit Services, the Northwest’s leading agricultural lending cooperative, has released its quarterly Market Snapshot reports covering the state of major agricultural commodities in the region. Northwest FCS industry teams throughout Idaho, Montana, Oregon and Washington monitor conditions and report outlooks for commodities financed by the co-op.
The Northwest's agricultural industries - including forestry and fisheries - continue to respond to tentative economic conditions as states begin to reopen. Northwest FCS is working closely with customer-members who are experiencing difficulties.
All Market Snapshots are posted online at Industry Insights.
Northwest FCS’ 12-month outlook for the agricultural commodities most common in the Northwest are summarized below.
Cattle – Northwest FCS’ 12-month outlook suggests break-even margins for cow/calf operators and feedlots. Packing margins were historically large throughout May and early June but have since returned to more normal levels. Cattle feeders continue to work through large inventories, especially heavier feeder cattle. Feeders ability to use price risk management and get cattle to slaughter on time will determine their profitability, which appears to be break-even to a small loss.
Dairy – Northwest FCS’ 12-month dairy outlook is for profitable returns as a surge in milk prices and government payment offset deep losses in April and May. Higher exports and the food box program continue to support higher milk prices.
Fisheries – Northwest FCS’ 12-month outlook foresees slight profits for fisheries. The industry is split with food service products seeing up to a 50% decline in pricing, while retail sales remain strong. The long-term effects of the pandemic could be positive as more consumers have bought seafood for home consumption.
Forest Products – Northwest FCS’ 12-month outlook calls for slightly profitable margins for timberland owners and forest products manufacturers. Lumber pricing recovered from its drop while log pricing remains subdued but is starting to increase. Volatility is expected in both markets moving forward, leading to cautious buying strategies.
Hay – For hay, Northwest FCS’ 12-month outlook is varied. Rain disrupted first cutting alfalfa and timothy harvest. Producers able to harvest hay without rain damage will sell hay at profitable prices. Rain damaged hay will trade at break-even to slightly unprofitable. Individual producer profitability will depend on the ratio of high and low quality hay.
Nursery/Greenhouse – Northwest FCS’ 12-month profitability outlook foresees profitable returns for nursery and greenhouse growers with strong gains in sales growth across all segments. COVID-19 stay at home orders rose demand for landscaping and gardening supplies as consumers increased gardening and completed home improvement projects.
Onions – Northwest FCS’ current outlook calls for break-even to slightly profitable prices. Coronavirus-related closures drove decreased demand in the food service sector. Supply chain disruptions are creating an oversupply, negatively impacting prices and market outlook for 2020.
Potatoes – Northwest FCS’ 12-month outlook is for break-even returns. Industry experts suggest potato acres are significantly lower year over year. Normally, fewer acres would bolster producer profitability, however restaurant and export demand remain uncertain.
Sugar Beets – Northwest FCS’ 12-month outlook calls for profitable sugar beet returns. Stocks to use remain historically low, favoring producer returns.
Apples – Northwest FCS’ 12-month outlook predicts break-even return to apple growers. Increased supplies and reduced exports have decreased prices. If another big crop is harvested, as growers anticipate, prices will remain low and leave many growers with little to no profits.
Cherries – Northwest FCS’ 12-month outlook expects slight profits for cherry growers this year. Decreased supplies should keep prices in ranges that will result in positive margins for growers. However, growers hit with measurable tonnage losses might not have enough fruit to capture much return.
Pears – Northwest FCS’ 12-month profitability outlook indicates a break-even year for pear growers. Although the 2019 harvest was smaller compared to 2018, inventory levels remain on par year over year. COVID-19 has added additional costs and pressures to growers. Harvest is quickly approaching and growers have to increase labor management and adapt labor housing to meet state mandates.
Wheat – For wheat, Northwest FCS’ 12-month outlook is for slightly profitable returns. Timely rains will increase yields in eastern Washington and northern Idaho. In Montana, conditions are variable with instances of abnormally dry conditions.
Wine/Vineyard – Northwest FCS’ 12-month outlook anticipates slight profits for wineries and vineyards, driven by consumer uptake to online sales channels throughout the COVID-19 pandemic, and increased overall consumption trends.
About Northwest FCS
Northwest FCS is a $13 billion financial cooperative providing financing and related services to farmers, ranchers, agribusinesses, commercial fishermen, timber producers, rural homeowners and crop insurance customers in Montana, Idaho, Oregon, Washington and Alaska. Northwest FCS is a member of the nationwide Farm Credit System that supports agriculture and rural communities with reliable, consistent credit and financial services. For more information, go to northwestfcs.com.