10-25 FB Onions Etc

More of the snapshot on agriculture.

Michael Stolp is Vice President of Market Research and Development for Northwest Farm Credit Services and is also a Certified Family Business Advisor who is a valuable resource for farmers. Quite frankly, Michael is a genius and does a great deal of research. Yesterday we heard something about how the drought has impacted commodity prices and today we continue with his valuable analysis. “Onion production and prices are average. Hay production faced challenges in early-season rain and late summer drought. High prices for competing feeds and a shortage of West Coast hay should support hay prices at or above current highs.

High feed costs are challenging the protein sector. Feeder cattle prices are being pressured lower. However, tight domestic beef cattle supplies and steady demand support cattle markets. Most beef cattle producers will realize record profits for their calves in 2012. On the other hand, dairy producers face thin profit margins. Northwest FCS’ initial estimates reveal breakeven levels between $16.50 and $17.00 per cwt, and varying third quarter returns, ranging from $2 per cwt gains to $2 per cwt losses. Hot summer temperatures and increased culling reduced milk production, which is supporting the prospect of higher milk prices in the fourth quarter. However, dairy producers’ profitability will depend on rising milk prices outpacing rising feed costs.”