Farm Credit tallies developments in quarterly report

SPOKANE — Northwest Farm Credit Services has released its quarterly Market Snapshot reports covering the state of major agricultural commodities in the region. Northwest FCS industry teams throughout Idaho, Montana, Oregon and Washington monitor conditions and report outlooks for commodities financed by the co-op.

The Northwest’s agricultural industries – including forestry and fisheries – continue to respond to tentative economic conditions as states reopen. Northwest FCS is providing a variety of financial solutions, through our account teams, to support customers who are experiencing difficulties as a result of COVID-19 disruptions.

Northwest FCS has developed a 12-month outlook for the agricultural commodities most common in the Northwest including:

Cattle

Northwest FCS’ 12-month outlook suggests break-even margins for cow/calf operators and feedlots. Packing margins were historically large throughout May and early June but have since returned to more normal levels. Cattle feeders continue to work through large inventories, especially heavier feeder cattle. Feeders ability to use price risk management and get cattle to slaughter on time will determine their profitability, which appears to be break-even to a small loss.

Dairy

Northwest FCS’ 12-month dairy outlook is for profitable returns as a surge in milk prices and government payment offset deep losses in April and May. Higher exports and the food box program continue to support higher milk prices.

Forest Products

Northwest FCS’ 12-month outlook calls for slightly profitable margins for timberland owners and forest products manufacturers. Lumber pricing recovered from the drop while log pricing remains subdued yet starting to increase. Volatility is expected in both markets moving forward, leading to cautious buying strategies.

Hay

For hay, Northwest FCS’ 12-month outlook is varied. Rain disrupted first cutting alfalfa and timothy harvest. Producers able to harvest hay without rain damage will sell hay at profitable prices. Rain damaged hay will trade at break-even to slightly unprofitable. Individual producer profitability will depend on the ratio of high- and low-quality hay.

Potatoes

Northwest FCS’ 12-month outlook is for break-even returns. Industry experts suggest potato acres are significantly lower year over year. Normally, fewer acres would bolster producer profitability, however restaurant and export demand remain uncertain.

Wheat

For wheat, Northwest FCS’ 12-month outlook is for slightly profitable returns. Timely rains will increase yields in eastern Washington and northern Idaho. In Montana, conditions are variable with instances of abnormally dry conditions.

Northwest FCS is a $13 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. For more information, go to northwestfcs.com.