Insights on agricultural commodities

General sentiment

The agricultural landscape continues to display mixed sentiment. Commodity producers brace for heightened financial challenges with persistently low prices and few profitable planting alternatives, compounded by tariff uncertainties. Despite this, a slight silver lining appears as USDA projects a 29% rise in net farm income, driven by $37 billion in expected government payments to help mitigate market volatility.

Conversely, livestock and dairy producers maintain an optimistic outlook due to strong consumer demand and tighter national supplies despite elevated retail prices.

Prices found a floor for crude oil and surged for natural gas in March, driven by rising geopolitical tensions, falling inventories and seasonal demand. Fertilizer prices also increased due to higher expected demand, rising input costs and tight inventories. Meanwhile, transportation costs were mixed across trucking and shipping.

Almond prices rallied 10%, supported by increased demand from the Middle East and tightening inshell almond supplies. Pistachio shipments remain steady and weather conditions favorable during bloom. Tariffs were applied to key markets including China, India and Europe, though the impact to West Coast producers remains unclear.

Apple prices generally held flat in March. While shipments to retailers and export markets are strong it remains unclear if the crop will clear ahead of the 2025 marketing season. Bud set suggests the 2025 crop could be large; however, there are key factors that will likely have an offsetting effect. Tariffs were applied to key markets including India, Taiwan and Vietnam, though the impact to West Coast producers remains unclear.

Feeder steer prices surged, reflecting strong demand and low inventory levels; however, feeders face challenges as cattle purchased at record prices will be sold in softer markets. Packers struggle with low utilization levels, leading to operational challenges and potential changes within the industry.

Milk production rose for the second consecutive month, supported by steady market demand for cheese, butter and other dairy commodities. While Q2 prices look challenging for profitability, many producers are expected to maintain stable returns, with increased production helping to offset lower milk checks and price coverage options providing additional support.

Early signs suggest a flat start to housing demand in 2025 as affordability remains a key challenge despite some softening in mortgage rates. Lumber prices have increased moderately so far in 2025, but remain near break-even levels for West Coast producers. Western log prices have benefited from lower supplies as relatively wet and/or snowy conditions limit harvesting capacity and slow deliveries.

Slightly lower hay prices mark the start of the 2025 season. Producers face high inventory levels and softer demand, keeping hay prices low. Increased dairy profitability could strengthen demand in some areas, but overall gains remain limited.

The navel season is winding down, with prices for large fruit relatively strong and those for medium to small sizes down. Juice prices have fallen from historic highs due to a rise in Brazilian supply. Lemon prices generally held flat in March at slightly unprofitable levels, though larger size fruit experienced moderate price declines on rising supply.

Reduced planting and surplus supply have producers bracing for another tough year. Trade tensions and low processor demand further challenge growers to adjust production strategies.

National wheat acres are expected to decline due to unfavorable prices, but global market dynamics could shift this outlook. Wheat markets are navigating low prices and production cost pressures. Producers should employ risk management strategies to stabilize profitability in 2025.

Released in March, California’s 2024 Grape Crush Report shows some interesting trends, including a sharp drop in total supply and lower grower returns across several major varieties. Year-over-year sales continues to fall across different marketing outlets and acres continue to be removed in California and Washington. Tariffs were announced on key wine export markets, though the impact to West Coast growers remains unclear.

Agricultural expertise and community commitment

AgWest’s outlook for major commodities is summarized below. Visit AgWestFC.com/industry-insights to view expanded analysis for each industry, monthly economic headlines, relevant data and trends, and additional special reports.

About AgWest Farm Credit

AgWest Farm Credit is a financial cooperative with approximately $35 billion in total assets as of 2025. It provides financing and related services to farmers, ranchers, agribusinesses, commercial fishermen, timber producers, rural homeowners, and crop insurance customers in seven Western states. AgWest is part of the 109-year-old Farm Credit System, the nation’s leading provider of credit to agriculture. With 59 locations across the West, AgWest is committed to serving its customers and supporting local communities. For more information, visit AgWestFC.com.