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SPOKANE, Washington (Jan. 24, 2024) – AgWest’s industry experts gather market information from various sources to deliver commodity-specific insights. All Market Snapshots are available at AgWestFC.com/industry-insights.
AgWest’s 12-month outlook for specific regional agricultural commodities is summarized below:
The outlook sees apple growers as generally unprofitable and packers as profitable for the 2023 crop. The large 2023 crop is lowering prices and profitability. Exports are improving while many growers are increasing insurance coverage, anticipating continuing challenges in the industry.
The outlook for cattle suggests profitable returns for cow-calf producers and slightly profitable returns for cattle feeders. Strong calf and feeder cattle prices made 2023 one of the most profitable years for Northwest cattle producers. Despite record retail beef prices, domestic demand has remained robust. Cow-calf producers will likely enjoy record cattle prices and lower production costs in 2024.
The dairy outlook suggests slightly unprofitable returns. Milk production is declining due to a shrinking herd and prices will likely increase in 2024, so long as demand remains consistent. Dairies face headwinds from inflation and a slowing global economy, requiring careful cash flow management and risk mitigation strategies.
The outlook for fisheries suggests slightly profitable returns. Drivers include flat groundfish supply in Alaska, growing pollock supply out of Russia, tighter restrictions on Russian seafood imports, falling sablefish prices, reasonable financial returns from the Red King Crab fishery and escalating tensions in the Middle East.
The outlook sees forest products manufacturers and timberland owners as slightly profitable. Drivers include low lumber prices, reduced lumber output in North America, strong performance among some panel mills and weak log demand.
The outlook for hay suggests breakeven returns for alfalfa and timothy hay. Improved drought conditions and reduced export demand have increased on-farm hay stocks in the Northwest and nationwide, after severe shortages in 2021 and 2022. However, tight margins are preventing dairies from rebuilding inventories as they continue to buy hay on an as-needed basis. High exchange rates and record hay prices, followed by built-up inventories and slow demand, have altered the export landscape. Hay marketers are adjusting their business models to reduce risk. Lower hay prices will weigh on producers’ profitability.
The outlook for onions suggests slightly profitable returns. Despite Hurricane Hilary delaying Idaho’s onion harvest and raising shrink concerns, overall quality remains good. Warm weather benefited other regions, boosting supply and yields. Strong restaurant demand and Mexican import needs are driving onion prices higher, offering profitability to growers even as production costs remain elevated. Careful shrink management and maintaining strong prices will be key for growers in 2024.
The outlook sees breakeven returns for pear growers. Drivers include mixed fruit quality, softening prices and increasing exports.
The outlook suggests slightly profitable returns for contracted potatoes and breakeven returns for uncontracted potatoes. Northwest potato production recovered to historic levels after two years of decline. The larger crop will provide enough raw supplies for processing plants to run at full capacity. Due to the large crop, uncontracted potato prices have decreased to breakeven levels or lower.
The outlook for sugar beets suggests profitable returns. Exceptional yields drove strong sugar beet production despite lower acreage. While storage shrinkage is a potential concern due to warmer temperatures, favorable domestic sugar prices, strong demand and lower input costs will create tailwinds for beet grower profitability.
The outlook for small grains and pulse crops suggests slightly profitable returns. While improved from previous years, drought continues to impact winter wheat conditions. Prices are softening as Russia floods the export market with cheap wheat. Producers will face headwinds from wheat prices declining faster than production costs and pressure from higher interest expenses.
The outlook sees wineries as slightly profitable and vineyards as breakeven. Drivers include good quality on the 2023 vintage, lower-than-expected production in Washington, excess wine supply across the West Coast and strong direct-to-consumer sales.
AgWest is a financial cooperative with approximately $30 billion in total assets that provides financing, crop insurance and related services to farmers, ranchers, agribusinesses, commercial fishermen, timber producers and rural homeowners primarily in seven Western states. AgWest is part of the 107-year-old Farm Credit System – the leading provider of credit to American agriculture.
Director – Marketing Communications