Apple production was expected to increase this year.
As we transition from the dead of winter to the rejuvenation of spring, Northwest Farm Credit Services has released its latest farm crop price report. Just like the fickle nature of spring itself, with its smatterings of sun frequently washed away by torrents of wind and rain, the outlook in farm country is decidedly hit and miss and often dependent upon factors outside the control of trusty try hard farmers.
Beef producers were forced to increase feed rations in late winter as a cold front hit and refused to make a hasty exit. Once Jack Frost did hit the road, the void was simply filled with buckets of rain, which provided little in the way of respite. However, spring grass conditions are in better shape than recent years, so greener pastures may be in store for the market. The first quarter of 2017 saw cattle prices rebound after a wonky end to 2016. Domestic and export demands have helped to pull the industry out of those lean beef times.
Last winter, Northwest dairy farmers had 7,000 more cows to care for than the previous year, but overall milk production remained unchanged as unsavory winter weather depressed the average production per animal while simultaneously driving up feed costs. Nationally, there were 66,000 cows added to the milking lines compared to the same time last year, which led to a spike in milk production. Cheese inventory in the U.S. and skim milk powder stocks in Europe remain high which is putting a squeeze on market growth. Profit margins are currently coming in right at, or below, even money, but the 12-month outlook predicts modest profitability for milk managers who limit expenses and milk-price risk.
The same prickly weather that swamped milk and meat markets has created a bit of a boon for hay mongers. While they were huddling together and burning calories to stay warm, those expanding bovine herds were plenty hungry. As a result, feeder hay inventories are lower than normal heading into the home stretch before hay bucking season. However, at the moment, prices are about 9 percent below where they were at the same time last year, and the only real growth in the industry is happening with alfalfa exports to new locations. The 12-month outlook forecasts profitability for producers who keep a close eye on expenses and begin the cutting year with no lingering inventory.
Winter wheat prospects are looking up this year thanks to dense blankets of winter snow and prolific spring rains that recharged soils. However, fieldwork on those crops and planting for summer varieties has been hampered by rains, but the outlook for a bumper harvest remains likely. The global stock of wheat for 2016-17 is estimated at a record 250 million metric tons, which is an increase of 4 percent over last year. Those stockpiles are hurting prices though, and most standard producers are expected to barely break even. Farmers utilizing pulse crops or harvesting above average yields may be able to put a little money in the bank.
Spud farmers are wiping mud from their eyes as they sit more than two weeks behind schedule for spring planting. That delay may cause early season scarcity on the market. Contracted potato producers are looking at possible profits but independent spudders will be lucky to break even. The 12-month outlook predicts more of the same.
The sugar beet scene is not as sweet as it should be as a late start to spring planting and rising temperatures in Idaho that have threatened the quality of remaining stocks. Heavy rain has pushed back planting by as much as two weeks already but sugar beets remain a popular crop for rotational planting. The 12-month outlook shows a chance of “modest” profitability for this year’s crop.
In the world of onions, the top fell in on the market, literally. Heavy snowstorms in the region caused the collapse of as many as 50 onion storage and processing facilities in Treasure Valley, Oregon. That loss of supply caused a temporary spike in prices, but reinforcements from Mexico soon pushed prices back down below the break even point. Spring planting is at least three weeks behind schedule for many producers and may lead to lower yields later this year if summer conditions don’t put the crop back to the black. The 12-month outlook remains bleak, but high quality residual stocks could fetch a slightly higher price.
Apple growers are feeling plucky as prospects for profitability remain high across the industry. As of March 1, the estimated stock in Washington was calculated at 134 million boxes, which was the second largest crop on record. Apple sales are keeping pace with previous years but traditional varieties may hit a snag as demand continues to shrink. The outlook is best for producers with a diverse and quality mix of apple varieties.
Cherry profits may be the the low hanging fruit of 2017 as a frigid winter has been hard on common pests and viruses while improving the likely harvest date from years past. So far this year the number of temperature appropriate growing days have matched historic averages and the harvest is expected to start rolling in around mid-June. Profitability is expected to continue over the next year, particularly for early-season varieties.
The pear market has avoided going mushy despite severe winter weather that dropped temperatures below zero and threatened to damage orchards. Prices are running parallel with supplies for most varieties. Bartlett and Bosc prices are down due to a large supply while d’Anjou prices have been buoyed by a small crop. Market prices are likely to remain stable over the next year.
Vineyard manicurists and vintners from Washington, Oregon and Idaho are riding high on the flow of a high-quality 2016 vintage. In addition to its quality, the grape harvest of 2016 came in at an unprecedented 270,000 tons. Crop damage was extremely limited over the winter and the market continues to be driven to new heights by consumers seeking high value and direct to consumer market wines. Stellar profits are likely to continue over the next year.
The forest industry has been hampered by a slow to recover housing market. Last year single-family starts made up just 67 percent of the new housing market which was down from a 10-year average of 71 percent, but higher than the 64 percent recorded in 2015. That slow but steady housing market recovery is expected to continue and returns from mills are also headed in a positive direction thanks to increasing lumber prices and a dependable demand for fiber.
Prospects at nurseries and greenhouses are on the rise along with the arrival of spring and slow growth in the single-family housing market. Overall sales are expected to increase in 2017 but early season sales may be depressed a bit by persistent poor weather. Improved sales and a more balanced inventory created higher prices and improved margins last year and the 12-month forecast expects the market to remain profitable.
Fisheries are being strung along by high demand. A bounty of pollock has caused that market to go soft bellied but a harvest limit on crabs and a poor pink salmon run have pushed those prices higher. The fishing fleet has also been adding new vessels and improving old equipment in order to create more efficient operations. Profitability is expected to remain strong over the next year, especially for Pacific cod and sablefish.
Northwest Farm Credit Services is a financial cooperative valued at $11 billion and tasked with providing financing and related services to farmers, ranchers, agribusinesses, commercial fishermen, timber producers, rural homeowners and crop insurance customers in Washington, Oregon, Alaska, Idaho and Montana.
