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900 W. Main St.,
PO Box 690 Grangeville, ID 83530
Phone: 208.983.1200 |
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| Ag outlook mixed for 2013 |
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| Highlights on health of select industries |
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The outlook for the Northwest agricultural industry is mixed. Prospects for many producers are influenced by the expectation of a record Midwest corn crop. Lower corn prices should help dairies and feedlots, but will likely pressure hay and wheat prices lower. The apparent recovery in the U.S. housing market has sparked a surge in prices for the forest products industry, but has yet to make a material impact on recovery in the nursery industry.
The following highlights depict the general health of select industries included in Northwest Farm Credit Services' Knowledge Center Market Snapshots, which are available at northwestfcs.com/resources.
Beef -- Prices for most cow-calf producers remain above breakeven levels. Continued dry conditions have decreased pasture availability and increased pasture costs in many areas of the Northwest, which will pressure profit margins and limit herd expansion. Cattle supplies remain a bullish indicator for the industry. With shrinking cattle inventories and stable retail demand for beef, cattle prices are positioned for improvement in the latter part of 2013. Cow-calf producers are expected to remain profitable. The prospect of better fed cattle prices and lower corn costs this fall should create profit opportunities for cattle feeders.
Dairy -- Northwest dairy producers' first quarter financial results reveal varying profitability. Milk prices and high feed costs challenged the industry. Producers positioned for profitability remain opportunistic, carefully evaluating choices and industry changes. Returns are expected to improve throughout 2013. Average milk prices are forecast to increase, supported by strong export markets. Feed costs should decrease, driven by weakening corn prices.
Hay -- Hay supplies in the Northwest are tight. Prices remain profitable ahead of the new crop year, but weakness in the dairy market and softening corn prices are pressuring alfalfa prices lower. Until milk prices return to more profitable levels, hay price increases will be limited. Hay growers expect to remain profitable in 2013. Low hay supplies will help establish a price floor for new crop hay. West Coast hay exports are positioned for additional growth given bullish prospects for Chinese and Middle Eastern markets. Looming concerns for Northwest exporters include the impact of the weakening Yen on Japanese hay demand, and non-competitive shipping costs via Northwest ports.
Wheat -- Northwest wheat producers are favorably positioned entering spring. Growers' financial condition is good, bolstered by favorable prices and crops in 2012. Fieldwork is under way. Northwest growers report adequate spring rains and/or soil moisture, except for select areas of Montana and Oregon. Market fundamentals are somewhat bearish, with 2013 planting intentions and grain stocks higher than expected. However, crop insurance guarantees are positive. Approved guarantee prices are $8.44 per bushel for spring wheat and $8.79 for winter wheat in Montana. In Washington, Idaho and Oregon, guarantees are $7.37 per bushel for spring wheat and $8.40 for winter wheat.
Forest Products -- Driven by increased demand and renewed optimism in the housing market, lumber and panel prices surged in late 2012 and the first quarter of 2013. As a result, many producers are operating profitably and expect to continue generating profits for most of 2013. Higher prices have encouraged some producers to add shifts and increase production levels. Several previously shuttered mills have been re-opened. So far, production increases have lagged increases in demand. Log prices have also increased, and are expected to remain strong through most of 2013. Log harvest may be constrained by the availability of contract loggers to meet increased demand.
Nursery/Greenhouse -- Housing starts are up from last year, but not yet at levels that will trigger significant demand increases for nursery stock. Although many producers report higher bookings, nursery sales will largely depend upon favorable weather patterns and homeowner choices to landscape or spend elsewhere. Supply shortages have created opportunities for some producers, with retailers more receptive to price bumps as long as product availability is assured. Sales for most producers should improve in 2013. However, the recovery underway is supply driven, meaning that opportunities for increased sales are the result of gaining market share from competitors.
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