SPOKANE, Wash.—The Northwest agriculture, forest products and fisheries industries enter 2016 with different outlooks, according to industry analysts at Northwest Farm Credit Services.
“The economy and strong dollar overseas, carryover effects from drought and summer fires, El Niño, global production, ending stocks and import/export activity are all influencing the markets for Northwest products,” said Michael Stolp, Northwest FCS Vice President – Customer Insights. “These external factors are impacting the profitability of Northwest producers.”
Lower prices challenge wheat, dairy and hay producers’ bottom lines, where prices are pressured by large supplies and slowed exports. After an extended period of high prices, beef cattle prices are falling, but expected to remain profitable. Potato exports are a contrast to other commodity export slowdowns, up more than 4 percent from 2014. The outlook for sugarbeets is also sweeter, with global consumption outpacing production. Apple prices are improving with slower shipping rates.
A relatively stable economy continues to sustain a recovery in forest products and fuel profitability in the nursery/greenhouse and wine/vineyard sectors. Uncertainty looms in select West Coast fisheries as they grapple with the effects of El Niño.
Sugarbeets – Sugarbeets remain a profitable alternative in growers’ cropping mix. Northwest sugarbeet production increased 3.3 percent in 2015. However, ending sugar stocks are lower, down 6.1 percent due to lower sugar imports. Globally, record world sugar consumption is forecast to outstrip production in 2015-2016.
Potatoes – Although Northwest potato growers harvested more acres in 2015, production was down almost 3 percent due to lower yields. A smaller crop is matched with quality challenges associated with an unseasonably warm growing season. Notwithstanding these challenges, U.S. potato exports are up 4.3 percent, while frozen potato stocks are down 4.5 percent.
Hay – Northwest hay markets are tepid, pressured by exporters’ and dairies’ ample supplies of hay on hand. The lack of quality hay in the market, marginal dairy profitability, slow export markets and excess hay stocks are keeping most buyers out of the market. Although quality hay is generally in short supply, stocks of lower-quality hay are up significantly due to untimely rain and extreme heat in 2015. Likewise, dairy producers are reducing hay in rations and increasing relatively low-priced corn, soybeans and other feeds.
Wheat – Wheat producers entered 2016 celebrating weather, but lamenting markets with prices below most producers’ breakeven points. Late fall and early winter precipitation exceed the prior year’s levels, setting the stage for a positive start to spring. However, record global production and ending stocks leave usable world wheat stocks at 32 percent, their highest since 2001-2002. With a world flush in wheat, U.S. wheat exports are their lowest since 1971-1972, constrained by fierce foreign competition and a strong dollar.