Northwest FCS Knowledge Center Market Snapshots: Producers are Optomistic for 2012

Published online: Feb 10, 2012
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Following a successful 2011 season, Northwest farmers and ranchers are optimistic about their prospects in 2012. Many commodities are experiencing strong crop prices, and robust demand. Although there is renewed faith in the U.S. economic recovery, markets remain volatile, increasing risk to producers.  
 
The following highlights depict the general health of select industries included in Northwest FCS Knowledge Center Market Snapshots, which are available at www.farm-credit.com/resources.
 
Beef:  Cattle markets are bullish, with record high prices that are supported by U.S. herd declines and strong foreign demand, and are expected to remain high into 2012. The market is tempered by increasing volatility and risk in the face of high corn prices and compressed margins for feedlots.
 
Dairy: After a strong start to 2011, Northwest milk prices have softened. Dairy producers' breakeven prices are pressured by high feed prices. The New Year includes rays of optimism, with resilient milk prices in Washington and Oregon and new demand for milk in Southern Idaho.
 
Hay:  Hay supplies are tight in the Northwest and prices are at record levels. Nearly all alfalfa stocks in the region are sold and paid for. Hay buyers locked-in supplies early in the season. Northwest hay exports are up 14.2 percent year-over-year, a reflection of favorable exchange rates and lower cost hay than California for most of the year. Alfalfa prices are expected to remain strong into spring.
 
Wheat:  Domestic wheat markets are pressured by abundant supplies and record world wheat production. Although wheat prices have dropped over the year, strong yields, early marketing and prudent use of crop insurance bolstered growers' financial positions. While wheat stocks are viewed by many analysts as bearish, the season-average price per bushel remains strong by historic standards.
 
Potatoes: Year-over-year potato production in Idaho, Washington, Oregon, and Montana was up 12 percent in 2011. Potato markets are strong, with demand supporting prices above $8 per cwt. Increased demand in domestic and world markets is expected to support strong U.S. potato prices in 2012.
 
Sugar Beets:  Sugar beets remain a consistent performer going into 2012, providing farmers' solid returns and profitability. Favorable conditions are expected to continue into 2012. Although Northwest production increased by 7.97 percent, nationwide production is down. Sugar prices remain strong entering 2012, supported by tightening supplies and increasing consumption.
  
Nursery/Greenhouse: Nursery producers are guardedly optimistic about prospects for 2012 as the economy improves. Challenges facing most producers revolve around uncertainties in the market, higher operating costs, labor shortages and cash flow challenges.
 
Knowledge Center quarterly Market Snapshots include information on 18 industries and periodic special reports. If you'd like to receive these updates on a regular basis, sign up to receive the e-newsletter version of Market Snapshots at www.farm-credit.com/resources. Also available on the resource pages are other Knowledge Center tools, Land Value Survey and regular columns by Dr. Dave Kohl and Dr. Ed Seifried. Northwest FCS Knowledge Teams have been created for the major agricultural industries Northwest FCS serves and are comprised of experienced, front-line staff.
 
Northwest FCS provides financing, related services and crop insurance to farmers, ranchers, agribusinesses, commercial fishermen, timber producers, and rural homeowners in Montana, Idaho, Oregon, Washington, and Alaska. For more information, go to www.farm-credit.com.