2021 Expected To Bring Profitability For Northwest Agricultural Commodities

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.

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

Cattle: The 12-month outlook on cattle suggests slightly profitable returns. The national herd size is moderating, which is providing tailwinds to producer profitability. Instability around COVID-19 continues to weigh on restaurant demand for high value cuts.

Dairy: Slightly profitable returns in 2021 are forecast, although continued volatility is likely. The Coronavirus Food Assistance Program provided direct payments to producers and the Farmers to Families Food Box Program purchased dairy products, which supported milk prices, mainly Class III. Similar assistance is expected in 2021.

Fisheries: The 12-month outlook for fisheries expects profitable returns. Although 2020 hit the seafood industry hard with restaurant sales declining more than 50 percent, consumers remained hungry for seafood. Fisheries will continue to face challenges with ongoing COVID-19 protocols, changing total allowable catches and uncertain trade relations in 2021. There is optimism for increased demand as restaurant sales recover and retail demand remains strong.

Hay: The 12-month outlook for the hay industry calls for slightly profitable returns. In 2021, the hay market will focus on modestly optimistic fundamentals. A weaker dollar favors exports, and higher prices for protein substitutes, like soybean meal, will provide tailwinds to hay producers.

Onions: Onions are forecast to provide break-even returns over the next 12 months. Supply and demand indicate prices could increase, yet producers are sensitive to continued COVID-19 restrictions in the food service industry.

Potatoes: Slightly profitable returns are expected for potato producers. Processors’ demand for uncontracted potatoes is restrained as the COVID-19 situation continues to dampen restaurant demand for processed potato products, such as french fries.

Sugar Beets: Sugar beet growers should see profitable returns for the 2020-21 season. The USDA forecast suggests stocks-to-use ratios will continue to decrease from 14.2 percent in 2019-20 to 13.5 percent in 2020-21, a favorable ratio for Northwest producers.

Wheat: The outlook calls for slightly profitable returns for wheat growers. The USDA’s projected 2020-21 season average farm price for all-wheat is $4.50 per bushel. Current markets are showing a higher average of $4.70 to $4.80 per bushel from the 2019-20 season. High yields and government payments will partially offset otherwise break-even wheat prices.