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Thursday, February 29, 2024
Feb. 29, 2024

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Economist predicts future of Cosmic Crisps and other Washington commodities

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SPOKANE — Cosmic Crisps, the proprietary apple variety of Washington, are expected to plateau in price for the first time.

The prediction comes from Randy Fortenbery, professor and endowed chair of the School of Economic Sciences at Washington State University. Fortenbury delivered his annual presentation Wednesday regarding the outlook of Washington agriculture industries during the Spokane Ag Expo and Pacific Northwest Farm Forum.

As prices for all other Washington apple varieties have maintained a steady increase over the past four years, Cosmic Crisps have plummeted until recently.

“It looks like we may have found where the price level should be relative to other prices, because it was really flat between 2023 and 2022,” he said. “This is pretty speculative, but right now, my guess is apple prices are relatively stable going into next year.”

Fortenbery was the executive editor of a WSU study that showed the price of the apple variety leveled out at about $1,800 per ton.

“A Cosmic Crisp apple in 2020 was worth as much as three or four nuggets of gold because you just couldn’t get them anywhere,” he said.

National apple production has been decreasing since 2019 but dropped quicker in Washington. Production of every single variety in Washington was down in 2023 compared to 2022, Fortenbery said.

“Normally, we represented about 70% of total national apple production. Last year, it was more like 64%,” he said, adding that this trend will change in 2024. “In the U.S., we’re expecting an increase of about 1.5%.”

China and South Africa are also predicted to increase their apple production, but Fortenbery said this will not have a major impact on the domestic market because many importers are countries in North America.

Between 2022 and 2023, Washington State exported 22% of the apples it produced. The main destinations were Mexico at 44% of total exports and Canada at 20%.

Wheat outlook

The disruption in the global wheat market from Russia’s invasion of Ukraine was immense. Washington prices reached a high of almost $11 per bushel of wheat in May of 2022, according to WSU data. That compares to $6.40 per bushel in February of this year, according to USDA Market News, Portland.

But Fortenbery said the forces that drove wheat prices up have stabilized.

“It’s pretty clear the market has completely discounted any supply disruptions as a result of the Ukrainian-Russian conflict,” he said. “Wheat prices have no price premium in them now.”

Oftentimes what happens globally has a bigger effect on Washington wheat prices than elsewhere in the U.S.

This is because around 90% of wheat produced in the Evergreen state is exported, compared to the 40 to 45% of all national wheat, Fortenbery said.

Based on global outlook numbers from the U.S. Department of Agriculture, he is expecting inventory to be low in the export market during 2024.

In contrast, Washington farmers are holding onto a lot of their wheat.

“This is a pretty positive picture for us because it says world inventory will be down, which means if our inventories are up, we can capture a greater share of the international trade market next year compared to the current year,” he said.

Unless yields are low like they were in 2022, Fortenbery predicts a good year for wheat farmers.

“In terms of generating farm income, I think we will see a strong wheat market,” he said. “I also think our cattle sector is going to do very well as we go forward.”

Cattle markets

In the last few months, weather patterns have affected feedlots across the country, especially in the Corn Belt. Fortenbery said a large percentage of cattle are going to slaughter between 70 and 100 pounds lighter than normal.

Those low weights have required more cattle to be slaughtered in areas like the Midwest to meet beef demand.

But since cattle were less affected in Washington, both inventory and price of cattle are relatively strong.

“It’s allowed us to keep prices relatively high given the increase of relative inventory,” he said. “So there’s some revenue being generated in the livestock sector, but other livestock sectors, especially dairy, was down relative to a year ago.”

A significant characteristic of the dairy industry in Washington is the decreasing number of producers, Fortenbery said.

“Just in five years, producers in the state have gone down by 100. That’s about a 23% reduction in a very short period of time,” he said.

According to the WSU study, contributing to this decrease is high feed, labor, fuel and interest costs that have narrowed profit margins to “catastrophic levels.”

“So in 2023, cattle returns in Washington were better than in 2022 on average,” he said. “But dairy returns were worse than in 2022 on average.”

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