In the News

The update features unique insights into economic drivers impacting agriculture and forest products in the West. This month’s report also features relevant insights into drought conditions.

Drought and water access

Drought conditions were relatively stable over the last quarter and year-to-date precipitation levels are generally favorable throughout the West, with the exception of Arizona. Coastal Washington experienced a slight improvement in drought conditions, while Extreme and Exceptional Drought expanded in portions of the Southwest. Conditions in northern Montana were mixed, with some degradation in the northern region and improvement along the Rockies and eastern border.

Nationally, the Environmental Protection Agency (EPA) announced plans to revise the definition of Waters of the United States (WOTUS), the Interior Department issued a funding freeze that will impact water conservation and infrastructure projects and efforts to update the Columbia River Treaty between the U.S. and Canada were paused amid the Trump Administration’s review of international agreements. Regionally, Western states face varying levels of snowpack and reservoir levels and policy changes that will impact access to water.

For full details on drought conditions and water access, see AgWest’s Drought and Water Update.

Major commodity insights

AgWest’s outlook for major commodities is summarized below. Visit AgWest’s Industry Insights for an expanded analysis of each industry, monthly economic headlines, relevant data and trends, and additional special reports. Or download a PDF of the complete report here.

Almonds and pistachios

Almond prices increased in April, marking a 54% year-over-year increase. While low global inventories are driving international demand, excess production capacity and uncertainty over 2025 crop size and quality present challenges. Low inventory carry-over along with strong demand should continue to support pistachio prices despite an expected large 2025 crop. Trade conditions remain top of mind for producers, with U.S. negotiations with India showing progress but those with China and Europe remaining uncertain.

Apples

Prices and shipments for the 2024 crop remain stable and favorable spring weather suggests good bloom/pollination for the 2025 crop. Growers are adapting to difficult market conditions in a number of ways, including removing orchards, reducing costs and/or managing for larger and higher value crops. Favorable weather conditions will support above average yields and good quality pear and cherry crops in the Northwest. A smaller than average cherry crop in California will limit overlap between the regions, which is supportive of prices. Trade tensions remain a concern, but Vietnam has reduced tariffs on some U.S. agricultural goods and India may follow suit.

Cattle

The continued decrease in cattle on feed, along with a lower percentage of heifers, suggests potential herd expansion, although high costs and market volatility may slow this process. Cattle markets have rebounded from significant volatility following a tariff announcement in early April, highlighting the importance of strong domestic and international demand.

Dairy

U.S. milk production saw a slight increase in March, primarily due to herd expansion in Texas and Idaho driven by increased processing capacity. However, overall national growth is limited by lower per-cow productivity linked to an aging herd and high beef-cross calf prices. Rising HPAI cases could further impact its milk output. Similar to other commodities, trade disputes and growing economic uncertainty may negatively impact dairy markets in the near future.

Forest products

Repair and remodeling activity is holding up well, but early indications point to a tepid housing market in 2025. The U.S. plans to double the duty rate on Canadian softwood lumber imports later this year. Affordability remains a significant challenge for the industry. Lumber prices were flat in April but are up 22% year over year, and log prices remain strong due to low inventories coming out of the winter. National policies aimed at increasing timber production are reportedly gaining traction in Oregon.

Hay

Hay exporters expanded capacity during the past decade to meet Chinese demand, but new tariffs are now jeopardizing this trade. Initial stockpiling by international buyers temporarily boosted Western prices, but subsequent tariff announcements led to widespread order cancellations, with China, a major importer, already reducing alfalfa purchases. Facing competition from alternative suppliers, Western exporters risk significant challenges if these tariffs persist, as other markets cannot fully compensate for lost Chinese sales.

Lemons and oranges

Navel prices increased 20% in April as supply of the 2024 crop winds down. Some growers reportedly delayed harvest for better prices, while some packers are expanding cold storage facilities to extend fruit further into the season. U.S. tariffs on imported oranges could further boost domestic prices, though retaliatory tariffs from key export markets pose risks. Meanwhile, orange juice prices have significantly decreased due to Brazil's expected crop rebound. Lemon prices remain depressed overall, but are up year-over-year for larger fruit sizes.

Potatoes

Potato growers nationwide are reducing planted acreage due to lower contracted acres and prices, with the Pacific Northwest accounting for the majority of this decrease. This has weakened the seed market, leading to widespread dumping. Potato demand remains under pressure with consumers dining out less, as evidenced by a major French fry purchaser reporting declines in both year-over-year sales and customer visits. Tariffs could further compound industry issues if export demand is impacted.

Wheat

Low wheat prices are causing producers to reduce acreage, with spring wheat acres at their lowest since 1971, particularly in Montana and Idaho. Western growing conditions are mixed, with drought conditions easing for some but remaining a severe strain for durum wheat, particularly in Arizona and California, which have experienced hot temperatures, and in Montana, which is experiencing expanding drought conditions. Despite low prices and financial strain, a rise in Russian wheat export prices and reduced port fees for Chinese vessels offer some hope for U.S. wheat export competitiveness.

Wine and wine grapes

Favorable weather in the Western U.S. points to high-yielding, good quality wine grape crops in 2025, but oversupplied markets are driving many growers to remove acreage and minimize production. Downward pressure on prices will continue for the foreseeable future due to subdued demand and elevated levels of good quality, inexpensive bulk inventories. Winery visitations this spring are mixed, with most areas experiencing fewer customers who are purchasing larger volumes of wine. Canada, the second largest export market for U.S. producers, has significantly reduced its purchases of U.S. wine in response to escalating trade tensions.