July 1, 2021

Northwest FCS News


Northwest Agriculture: Pandemic Recovery Met with Drought Challenges

SPOKANE, Washington (July 1, 2021) – Northwest Farm Credit Services, the Northwest’s leading agricultural lending cooperative, has released its quarterly Market Snapshot reports covering the state of major agricultural commodities in the region. Northwest FCS teams throughout Idaho, Montana, Oregon and Washington monitor conditions and report outlooks for commodities financed by the co-op. All Market Snapshots are posted online at Industry Insights.

Northwest FCS’ 12-month outlook for the agricultural commodities most common in the Northwest are summarized below. 

Cattle – Centered around drought, the cattle industry is expected to see unprofitable returns. Drought will force producers to carefully evaluate retention of breeding stock and marketing plans. 

Dairy – The dairy outlook anticipates slightly profitable returns. Continued increased feed costs will compress producer profitability. Risk management strategies will be increasingly important as government assistance wanes.  

Fisheries – Profitable margins are expected for commercial fishing operations. Robust demand is increasing pricing in several species and COVID-19 vaccines should help lower operation costs. As restaurant sales continue to improve, seafood demand is expected to see an extra boost. Therefore, seafood markets are favorable overall.  

Forest Products – Very strong profits suggested for forest products manufacturers, and solid profits expected for timberland owners. Despite recent drops in lumber pricing, prices remain in very profitable, record territory. Log pricing modestly improved over the quarter, although at a more moderate pace than lumber pricing. Profitable log pricing is supported by record wood product demand.   

Hay – The hay outlook calls for slightly profitable returns. Producers in drought-stricken areas will face headwinds to production and profitability. Producers with stable irrigation will benefit from higher hay prices. 

Nursery/Greenhouse – Nursery/greenhouse operations are expected to be profitable. Market fundamentals, such as a strong housing demand, should keep sales strong. Supplies are balanced but limited enough to keep prices stable. Increasing labor and freight costs will impact growers’ returns.   

Row Crops

Onions – Slightly profitable onion returns are anticipated. Storage onion prices are low. Demand for medium to large onions is driving prices higher.   

Potatoes – The profitability outlook suggests slightly profitable returns for contract potato producers. Favorable demand driven by the return of restaurant demand will provide tailwinds to producers and processors alike.  

Sugar Beets – The 2021 sugar beet outlook is favorable with profitable returns. Falling stocks-to-use ratio as forecast by the USDA from 14.3% (2020-21) to 11.8% (2021-22) is favorable for Northwest producers. Warming temperatures are expected to increase growth after headwinds from cooler spring weather.  

Tree Fruit

Apples – Slight profit margins are foreseen in the apple industry. Although low packouts have been the reality throughout the season, higher quality fruit coming out of storage now is improving packouts. Prices are also improving as supplies dwindle. Returns to growers should improve for the last few months of the season, but low yields will keep overall profit margins slim.  

CherriesSlight profit margins are expected for cherry growers. Favorable consumer interest is expected this season. However, early market price compression will likely stay through mid-season as cherry supplies increase and a heat wave challenges the industry.  

Pears – Only slight profits are expected for pear growers. There’s evidence that the pear industry’s efforts to improve domestic demand have paid off. Increasing domestic demand, strong packouts and good pricing will provide good margins. However, when factoring in low production to cover increasing costs, pear growers’ returns are minimal.  

Wheat – Breakeven returns are anticipated for wheat producers. Drought stunted winter wheat crops while extinguishing spring wheat. While some areas will have average winter wheat crops, other spring wheat crops are being terminated. Crop insurance will provide much needed support to wheat producers.  

Wine/Vineyard – Slight profits are anticipated for both vineyards and wineries. Current relatively low grape supplies are increasing pricing, but the industry remains overplanted and good yields would push prices down. Some wineries are very profitable while others continue to struggle depending on their sales channels. Overall, flat consumer demand means wineries will have to find creative ways to capture market share and profits. 

About Northwest FCS

Northwest FCS is a $14 billion financial cooperative providing financing and related services to farmers, ranchers, agribusinesses, commercial fishermen, timber producers, rural homeowners and crop insurance customers in Montana, Idaho, Oregon, Washington and Alaska. Northwest FCS is a member of the nationwide Farm Credit System that supports agriculture and rural communities with reliable, consistent credit and financial services. For more information, go to northwestfcs.com



Kylee Andrews
Communications Specialist