Apples, Wine, Lumber
Wine grape harvest is underway throughout the Northwest, with many producers getting an early start. Washington and Oregon producers are projecting record crops, supported by ideal growing conditions and continued expansion of vineyard acres. The 2014 Idaho crop is expected to be larger than last year. Nonetheless, a grape shortage in Idaho is possible given that winery growth is outpacing vineyard acreage development. In general, wine consumption trends bode well for Northwest wineries and grape growers.
U.S. housing starts continue to fall below expectations, contributing to continued volatility in the forest products industry. Headwinds in the housing market include tight credit standards and low levels of new household formations. Weaker demand drove lumber and panel prices lower at the end of the quarter, while log prices continued to decline throughout the quarter. Log prices, though, remain at relatively high levels, supported by short-term supply constraints. Exports have been a key driver of log prices in the Northwest, but export demand has softened this year. Exports levels are expected to continue declining into 2015.