Northwest 2013 Ag Outlook A Mixed Bag, Northwest Farm Credit Notes

Better times for many viewed in 2013 Northwest Farm Credit report.

Published on: Apr 29, 2013

A mixed economic outlook for Pacific Northwest ag is anticipated by the Northwest Farm Credit Services of Spokane, Wash.

"Prospects for many producers are influenced by the expectation of record a record Midwest corn crop," concludes the co-op bank, which issued the crop-by-crop predictions for 2013 as follows:

BEEF: Prices for most cow-calf producers remain above breakeven. Dry conditions are decreasing pasture availability, increasing costs in many areas of the  Northwest.  However, cattle prices are positioned for improvement in late 2013, and cow-calf producers are expected to remain profitable.

DAIRY: Northwest producer first quarter profitability helped, but milk prices and feed costs challenged the industry.  Returns are expected to improve this year, with average milk prices expected to go up, supported by strong export sales. Feed costs should drop due to weakening corn prices.

Improving in housing starts in the nation could mean good news for the struggling Northwest nursery industry, Northwest Farm Credit Services believes.
Improving in housing starts in the nation could mean good news for the struggling Northwest nursery industry, Northwest Farm Credit Services believes.

HAY: Northwestern supplies are tight, and prices remain profitable prior to the new crop year. Weaknesses in dairy, and softening corn prices, are pressuring alfalfa prices downward, however. Until milk prices return to more profitable levels, hay price increases will be limited. Hay growers are  expecting to remain profitable throughout the year. Low hay supplies will help establish a price floor for the new crop year.

 WHEAT: Northwest producers were favorable positioned this spring. Growers' financial condition is good, bolstered by favorable prices and crops in 2012. Adequate spring rains have been reported in the Northwest, but not in some areas of Oregon and Montana. Market fundamentals are "somewhat" bearish, with 2013 planting intentions and grain stocks higher than predicted.

POTATOES: Big yields and acreage last year created surpluses. Growers experienced the impact of open potato prices ranging  from $1 to $3 per hundred pounds, compared to producer breakeven levels of $5-$7 per cwt. For those growing contracted potatoes, prices were near $7 cwt. last year. United Potato Growers projects planted acreage this year will be down as much as 5%.

SUGAR BEETS:  Growers entered the year in strong financial condition following several years of strong demand and prices. But growers should expect lower prices and tighter margins this year. Increased sugar  supplies and a high stock-so-use ratio have depressed prices throughout the world. Provided prices remain above $40 per ton, Northwest producers should remain profitable.

APPLES: Good prices and strong demand are great news for producers in the Northwest, the nation's No. 1 vendor of   the crop. Northwest growers can expect strong returns for the 2012/13 crop year, Northwest believes, but the industry will be tested for its ability to market record crops throughout the world. Growers in this industry are positioning themselves well by paying off their short term debt, the bank observes.

WINE/VINEYARD: Wine grape prices increased in 2012, and that trend may continue through this year. Growing conditions in Oregon and Washington have been favorable for the success of the new crop. Colder weather in Idaho leaves some uncertainty about winter damage in vineyards there. Long-term investments in Northwest wine production assets by major industry players signals  belief in the region as a key area for  wine grape production.

NURSERY/GREENHOUSE: Housing starts are up, and that's good news for the landscape industry. Many producers reporting stronger sales, but nursery markets will depend much upon favorable weather and homeowner choices whether to landscape or not. Supply shortages have created new opportunities for some in the industry. Sales for most in the industry should improve this year.