Market Trends Shift: Most Industries Remain Profitable; Some See Challenges Ahead
SPOKANE, Washington (April 5, 2023) – 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 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 agricultural commodities is summarized below:
The 12-month outlook sees apple growers as slightly profitable and packers as break-even. Drivers include a small 2022 crop, reduced access to Midwest and East Coast markets, lower yields in New Zealand, challenges with labor costs and availability, supply chain issues and uncertainty regarding the 2023 crop.
The 12-month outlook for cattle suggests profitable returns for cow/calf producers and slightly profitable returns for cattle feeders. Drivers include strong prices, a small national herd, elevated production costs and favorable export markets.
The outlook sees cherry growers as slightly profitable. Drivers include uncertainty around demand and the 2023 crop, challenges with labor costs and availability, rising cherry imports and supply chain issues.
The 12-month dairy outlook suggests break-even returns. Dairies will face headwinds from continued elevated feed costs, tight forage supply and weaker milk prices. National milk production has increased more rapidly than domestic use and exports, resulting in downward price pressure.
The outlook sees fisheries as profitable. Drivers include softening prices, steady demand, China’s removal of COVID-19 restrictions and rising steel prices.
The 12-month outlook foresees forest product manufacturers as slightly profitable and timberland owners as profitable. Drivers include falling lumber demand, reduced lumber output, weakening log markets and elevated input costs.
The outlook for hay suggests slightly profitable returns for alfalfa and breakeven returns for timothy. Drivers include improvements to irrigation conditions and softening prices. Timothy hay will undergo headwinds from built-up inventories leading to less demand for new crop exports.
The 12-month outlook sees the nursery/greenhouse industry as profitable. Drivers include rising prices, resilient demand, falling consumer sentiment, interrupted deliveries to East Coast markets, and increasing interest in drought-tolerant plants.
The profitability outlook for onions suggests slightly profitable returns. Competition from the large Mexican crop has lowered onion prices in Idaho and in the Columbia Basin of Washington. Growing conditions in 2023 will influence growers' profitability as profits are being eroded by persistently high production costs.
AgWest Farm Credit’s 12-month outlook sees pear growers as slightly profitable. Drivers include steady demand, greater competition from Argentina, challenges with labor costs and availability, supply chain issues, and uncertainty regarding the 2023 crop.
The 12-month profitability outlook for potatoes suggests slightly profitable returns. Drivers include favorable weather conditions, lower potato stocks, slower shipments for the remaining 2022 Northwest crop, rising input costs and higher export volumes.
The 12-month profitability outlook for sugar beets suggests slightly profitable returns. Improvements in moisture conditions from snowpack will benefit sugar beet production. High production costs will squeeze beet growers’ cash flow.
The 12-month profitability outlook for small grains and pulse crops suggests profitable returns. Despite drought concerns, conditions have improved for barley, durum and wheat acres. Improvements in growing conditions, slow export sales and global supply increases have put downward pressure on new crop prices.
The wine/vineyard outlook sees the industry as slightly profitable. Drivers include decreasing demand, a below-average 2022 crop size in California, declining import volumes and excess capacity for wine grape production.
About AgWest Farm Credit
AgWest is a financial cooperative with approximately $30 billion in total assets that provides financing and related services to farmers, ranchers, agribusinesses, commercial fishermen, timber producers, rural homeowners and crop insurance customers primarily located in seven Western states. AgWest is part of the 107-year-old Farm Credit System – the leading provider of credit to American agriculture. AgWest serves customers in 59 locations throughout the West. For more information, visit agwestfc.com.