NW Farm Credit Services Releases Outlook Reports for Cattle, Dairy, Forest Products and Hay
Northwest Farm Credit Services, the Northwest's leading agricultural lending cooperative, has released its quarterly Market Snapshot reports that look at the state of major agricultural commodities in the region.
Northwest FCS industry teams working 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.
Cattle producers should see slightly profitable returns over the next 12 months. Roughly half of the country is experiencing some level of drought or dryness, and winter wheat grazing conditions have deteriorated. Many calves are moving into the feedlots, which may slow or reverse cowherd expansion. Exports remain strong as the dollar loses value relative to currencies of many trade partners. However, uncertainty regarding trade policy continues to hang over beef markets.
Dairies are expected to be unprofitable in the first half of 2018, then see moderate improvement into the fall. Global oversupply continues to plague the industry. However, demand is strong and trade is fervent. China purchased 74,000 tons, or 36 percent, more dairy products in January 2018 when compared to January 2017. It appears dairy products are on clearance in an attempt to clear the glut.
Strong profits should benefit fisheries over the next 12 months. Pollock demand and prices are positive. The Bering Sea cod 'A' season trawl fishery closed in 22 days due to increased participation and a lower total allowable catch (TAC). Halibut and sablefish TAC have been set after a delay due to harvest-level disagreements between Canada and the U.S. Halibut TAC for 2018 is 16.6 million pounds, down 9.3 percent from 2017. For 2018, sablefish TAC is 25.8 million pounds, a 14.7 percent increase from 2017.
The 12-month profitability outlook calls for very profitable margins for timberland and profitable margins for mills. Log prices remain elevated due to tight inventory and high lumber prices. Demand for lumber is trending high in 2018 with strong housing starts, and in a robust economy is forecast to continue with starts around 1.28-1.31 million at a seasonally adjusted annualized rate. This bodes well for the future of the forest products industry.
The 12-month profitability outlook shows profitable returns to alfalfa growers despite weak dairy demand. Exports to China and Saudi Arabia will continue to drive the alfalfa export market as both continue to grow. Drought conditions in the Klamath Basin will result in reduced irrigation water availability, thereby lowering production in 2018. In Montana, extended snow cover is driving cattle producers to feed longer than normal, drawing on already low inventory.
That's your Land and Livestock Report-I'm Russell Nemetz.