The Newsletter: Hops market flooded
seattletimes.nwsource.com Stephen Dunphy / Times staff columnist
Search web archiveHops growers are being challenged to cut production even further. For many, it is a tough decision after growing the key ingredient for beer for generations. Most hops in the country are grown in Washington state in the fertile ground of the Yakima Valley.
But the simple truth is there are more hops than the market can handle. Doug MacKinnon of the Hops Growers of America said at its annual meeting recently the industry needs to trim 10,000 acres from production and even that number may be conservative.
"The market has given every signal possible that it is so full of hops it is about to burst," MacKinnon told growers. "Breweries have purchased hops to satisfy 2003 and 2004 demand from the 2002 crop. Other breweries have said bluntly that at the current prices, they cannot afford not to buy hops even though they don't need them right now." The only way to go is with a firm contract, MacKinnon said. Anything else is a guess.
The first quarter after the holiday season is typically among the slowest periods for international cargo movement. But don't tell the Port of Tacoma.
Its North Intermodal Yard is starting 2003 like it closed 2002 — at a record-setting pace. The yard, which serves Evergreen Marine (Taiwan) and "K" Line (Japan), handled a record 7,312 intermodal lifts — transfers of containers between ship and rail — from Feb. 8-14. The previous one-week record was 6,825 lifts in October 2002, the first week after the West Coast labor lockout.
Compared with January 2002, Tacoma cargo volume was up 35 percent.
The Canadian border is less than 150 miles away, yet knowledge about U.S.-Canada trade is dismal. The U.S.-
Canada Partnership for Growth recently did a survey that revealed a lack of awareness about the importance of this trading relationship.
In a survey of 819 Americans, only 12 percent knew Canada was the largest buyer of U.S. goods and services. The top responses included Japan, China, the United Kingdom and Mexico.
Only 1 percent named Canada as the leading source of oil and natural gas for the U.S. market. Saudi Arabia, Iraq, Venezuela, Kuwait, Mexico and Iran received much higher percentages. Canada is the largest supplier of oil to the U.S. and provides most U.S. natural-gas imports.
The U.S. does more trade with Canada than with the entire European Union. Canada buys more U.S. goods and services than any other country, and 37 of the 50 states list Canada as their top foreign customer.
RBC Dain Rauscher economist Vince Boberski questions the emphasis investors and commentators are placing on the possible war with Iraq. It's too easy to blame potential conflict for the problems in the economy, he said.
The war plays a role, of course, but it is not the primary reason for high unemployment and a lack of business investment.
"It is a lack of pricing power for the makers and distributors of real goods," Boberski said. "It is, for manufacturers, a stubbornly strong dollar that has begun to move toward more reasonable only over the last 2-½ months. It is a reaction to overly zealous hiring during the boom. And it is a realization that computers and software can last, say, four years instead of three."
Sounds right to me. Basic business conditions have always been more important than speculation.
Stephen H. Dunphy's phone: 206-464-2365. Fax: 206-382-8879. E-mail: sdunphy@seattletimes.com. More columns at www.seattletimes.com/columnists