AgWest Farm Credit has released its quarterly Market Snapshot reports covering the state of major agricultural commodities in its northern region. AgWest’s team of highly skilled researchers and industry experts gather market information from various sources to deliver consolidated commodity-specific insights. All Market Snapshots are posted online and available for download at agwestfcs.com/industry-insights.
AgWest’s 12-month outlook for specific agricultural commodities summarized below:
The 12-month apple outlook anticipates growers being slightly profitable and packers breaking even. Drivers include small crop size, low throughput for packers, slightly improving crop input conditions, favorable demand and pricing, and shifting currency trends.
The cattle outlook suggests slightly profitable returns for cow/calf producers and cattle feeders in 2023. A tighter beef supply supports strong cattle prices, with the USDA forecasting an 8% increase in fed-steer prices. Persistent drought has created national headwinds for the cattle industry. Improvements in moisture conditions will benefit Northwest cattle producers.
The dairy profitability outlook suggests slightly profitable returns. Demand will soften as economic uncertainties hinder domestic consumer spending, and less international trade puts downward pressure on global prices. Dairy margins will be squeezed tighter by weakening milk prices and volatile production expenses.
The 12-month outlook anticipates fisheries as profitable. Drivers include strong supplies, favorable markets, federal assistance, mixed international conditions and falling steel prices.
The outlook anticipates forest products manufacturers and timberland owners as profitable. Drivers include steady log markets, tight transportation capacity, indefinite mill production curtailments in British Columbia and falling log demand from China.
The outlook for hay suggests profitable returns. Projected reductions in hay and grass production due to drought and lower national on-farm inventory supports strong hay prices in 2023. Demand from exporters and producers rebuilding hay inventories support profitable returns for hay producers.
The 12-month profitability outlook for onions suggests slightly profitable returns. Profitability in 2023 will depend on growing conditions and moisture. Producers with larger-sized onions in storage are well positioned to capture higher prices, given lower yields and shorter 2022 onion inventories across the Northwest. Ongoing supply chain and input costs challenges will create headwinds for producer profitability.
The outlook for potatoes suggests slightly profitable returns. Uncontracted growers benefited from high open market prices as processors actively bought open market potatoes. The USDA forecasts production expenses will rise across nearly all categories creating headwinds for potato growers.
The 12-month profitability outlook for sugar beets suggests slightly profitable returns. National sugar beet yields fell 13% from 2021 records due to drought in the Red River Valley, Colorado, and Nebraska. Slice campaigns in Montana will end early from the smaller crop. Input costs uncertainties will weigh on producer profitability.
The 12-month outlook expects to see pear growers as slightly profitable. Drivers include favorable crop quality and size, steady demand, increased imports from Argentina and slightly improving crop input conditions.
The outlook for small grains and pulse crops suggests slightly profitable returns. The 2022 Northwest wheat and pulse crops improved following drought recovery, but the national winter wheat crop was the smallest since 1970. Wheat producers are in a solid financial position to withstand tighter margins driven by high production costs and softening wheat prices.
The 12-month outlook expects the winery and vineyard industry to be slightly profitable. Drivers include favorable grape crop quality and size, changing consumer behavior, mixed wine sales data and slightly improving crop input conditions.