Most Pacific Northwest agricultural commodities are expected to be slightly profitable, though some will see drops in pricing due to effects of the COVID-19 pandemic, according to a quarterly report by Spokane-based agricultural lending cooperative Northwest Farm Credit Services. 

The market snapshot of the state of key agricultural commodities in the Northwest shows that wheat producers are expected to break even in 2020. While the U.S. Department of Agriculture is projecting the average price for wheat to decrease by 61 cents a bushel from last year, the 2019 growing season produced above-average yields, and industry analysts believe prices will increase slightly this year.

The passage of the U.S.-Mexico-Canada Agreement late last year helps raise prospects for wheat producers, as has a preliminary trade agreement between the U.S. and China. Northwest Farm Credit reports that most analysts believe market lows were established in fall 2019, and prices can be expected to rise slightly as this year goes on.

Forest products are expected to see slight profitability, driven partly by an early surge in housing construction starts. Residential construction remains the largest driver of the industry. However, the impacts of the COVID-19 pandemic are expected to temper growth and lower prices, as are China’s tariffs on wood products.

Of all the commodities the cooperative reports on, dairy has the least favorable outlook for the next 12 months. Northwest Farm Credit anticipates an unprofitable year for dairy as oversupply and COVID-19 market and supply chain disruptions take their toll on the industry.

“Producer profitability will depend on risk management strategies placed before the COVID-19 outbreak,” the report says. A rush on grocery stores in March was favorable for the dairy industry, but closures of restaurants and schools likely will mitigate the positive effects of panic buying. The rest of the year looks grim, as markets will respond to oversupply conditions in the wake of the pandemic, the report says.

As the cattle industry responds to strong domestic demand, Northwest Farm Credit predicts a fairly stable year for the industry, with feeder cattle producers expected to either break even or experience a slight loss, and cow calf producers expected to either break even or see a slight profit.

The U.S.-Mexico-Canada Agree–ment trade agreement has given the industry a dose of encouragement for international trade prospects. In the northwest, improved weather conditions year over year meant reduced calving mortality and improved feedlot conditions. There has been some uncertainty due to COVID-19 — in the initial market response, feeder cattle and live cattle futures fell by about 25%, but futures have since moved higher to match cash cattle prices, which remain resilient.

Hay profitability is likely to remain moderate, Northwest Farm Credit forecasts. Despite disruptions in livestock markets and shipping container availability amid the COVID-19 pandemic, exporting prospects are good. Alfalfa profitability is likely to moderate, the cooperative says, as producers intend to plant more acres this year. Meanwhile, a large inventory of midgrade timothy hay is driving weaker prices.

Other industries expected to see a moderately profitable year include nurseries and greenhouses, sugar beets, and early- and late-season cherries.