Fundamentals good, trade taking a toll on many Northwest ag industries

Northwest Farm Credit Services, the Northwest’s leading agricultural lending cooperative, has released its quarterly Market Snapshot reports that look at the state of major agricultural commodities in the region.

Northwest FCS industry teams working throughout Idaho, Montana, Oregon and Washington monitor conditions and report outlooks for commodities financed by the co-op.

All Market Snapshots are posted on the company’s website, northwestfcs.com, Industry Insights.

Following are a select grouping of Northwest FCS’ 12-month profitability outlooks for major Northwest commodities financed by the company.

Cattle producers should see slightly profitable returns over the next year. Drought conditions in the Midwest pushed calves into feedlots sooner than anticipated.

As a result, the number of cattle on feed is the highest since data collection began. Slaughter rates are correspondingly high. Domestic consumption and export demand continue to grow, helping to offset high supplies.

Uncertainty surrounding trade provides opportunities with falling feed costs, and headwinds as export demand is called into question.

The hay industry should see profitable returns. Absent potential trade wars, fundamentals of supply and demand remain encouraging.

Northwest hay inventory is down 19 percent from last year while nationally, hay inventory is down 36 percent. Lower inventory suggests higher prices and improved producer profitability year over year.

Uncontracted potato producers could bring in slightly profitable returns and contracted potato growers should see profitable returns. Favorable growing conditions suggest strong yields for the new crop.

However, trade tensions indicate lower exports and headwinds to producer profitability.

Wheat growers may see slightly profitable returns. As global supplies continue to grow, U.S. wheat production is projected 25 percent lower, which may provide price support into the 2018-19 crop year.

USDA’s pre-tariff projections suggest the 2018-19 season-average farm price for all-wheat will be between $4.60 to $5.60 per bushel. However, trade issues will provide material headwinds if a resolution is not reached.