Northwest agricultural producers will see at least a small profit this season from most of the crops they raise, according to a report by Northwest Farm Credit Services.
The financial cooperative’s quarterly Market Snapshot concludes producers of cattle, potatoes, sugar beets, onions, hay, apples and wine should do better than break-even for this season’s crop.
Dairy producers are operating around the break-even point, and wheat farmers are expected to lose money. USDA forecasts the all-wheat price for the current crop will range between $4.30 and $4.90 per bushel.
“We have record high grain stocks in the world, and they don’t rot,” said University of Idaho Extension economist Garth Taylor.
Besides wheat, Taylor agrees with the report that most producers should be OK.
“The big picture on this is we’re not in the boom years on agriculture,” Taylor said. “We’re back in that steady slog of just barely above break-even for many of our crops.”
The break-even point varies from farm to farm, depending on the debt load, cost of inputs and labor costs compared to the yield and price of the crop.
According to the report, cattle producers who market calves are benefiting from a recent price rally fueled by growing beef exports. UI Extension economist Ben Eborn said U.S. beef exports to date are up 14.5 percent from 2016, and November futures for feeder calves are now $1.56 per pound, up from $1.40 in mid-August. Though the U.S. beef herd continues to expand, Eborn said the value of the dollar is softening and improving the export outlook.
Feedlot operators, however, continue to operate below the break-even point, while spending more on calves, said Lewisville cattle feeder Duwayne Skaar.
“Something has got to give on our end,” Skaar said.
The report finds hay growers are making slightly above break-even margins, with a low supply of high-quality hay and year-to-date exports that are 25 percent above last year’s pace contributing to higher prices.
UI Extension forage specialist Glenn Shewmaker anticipates a widening gap between the prices of feeder hay and dairy-grade hay.
“It sounds like quite a bit of hay in Eastern Idaho on all cuttings got some rain and a lot of hay around Kimberly got rained on,” Shewmaker said.
Sugar beet farmers say damage to sugarcane caused by hurricanes and recent updates to an agreement preventing Mexico from dumping sugar onto the U.S. market have strengthened sugar prices, and they’ve been pleased by Northwest yields and sugar content.
The report anticipates fresh potato prices will increase after harvest into profitable territory, highlighting a 4.6 percent reduction in Idaho’s 2017 planted acreage. Oakley, Idaho, fresh grower Randy Hardy has been encouraged that processors are buying growers’ production overages, unlike last season, and at-harvest fresh prices haven’t dropped as significantly as last season. There’s also ample spud storage this season, which was full during the 2016 harvest, Hardy said.
“Once harvest is over and the storages are buttoned up, we’ll probably see some price strengthening sooner than normal,” Hardy said.
Rick Naerebout, CEO of the Idaho Dairymen’s Association, said his members have earned revenue slightly below the break-even point for the past 24 months. USDA has forecast somewhat optimistic milk prices of $17.70 to $17.90 per hundredweight in 2017, but Naerebout is concerned about tight labor and “tremendous uncertainty” regarding trade with Mexico.