Federal Reserve reports mixed ag conditions across U.S.Federal Reserve reports mixed ag conditions across U.S.
Federal Reserve’s latest Beige Book highlights current economic conditions across different districts.
September 8, 2017
Agricultural conditions remained mixed across the countryside as producers deal with lower prices and adverse weather. The Federal Reserve Bank released its August 2017 Beige Book update, which provides a summary of commentary on current economic conditions by each of the districts across the country.
The Chicago, Ill., region -- which includes much of the major crop areas of Iowa, Illinois and Indiana -- saw worsening economic conditions in the recent review. A lack of rainfall in July and early August hurt crops in much of Iowa and parts of Illinois and Indiana. Crop conditions and maturity lagged behind last year’s bumper crop, to the point that contacts expected the corn harvest to be below trend and the soybean harvest to be at about trend. Corn and wheat prices fell, while soybean prices were flat.
Given current prices, some operations will be able to make crop insurance claims and take advantage of government support programs, the Beige Book noted.
On the livestock front in the Chicago district, dairy prices moved higher, reportedly easing losses for dairy operations. The report noted, “Hog and cattle prices were down, but prices were still high enough for many operations to be able to turn a profit. In addition, contacts expected that the opening of a pork processing plant in Michigan would lead to greater demand for hogs in the region.”
In the Fed's St. Louis, Mo., region, agricultural conditions were mixed during this reporting period. The conditions of the district’s cotton and rice crops have improved since the previous report and are better than at the same time last year. Although rice conditions have improved, early-season flooding pushed acreage down 25% from last year. “The lost acreage will hurt rice farmers this year, but some of these farmers are optimistic that a recent trade agreement with China will boost profits,” the report stated. Meanwhile, corn and soybean conditions declined from the previous period.
In the Minneapolis, Minn., region, agricultural conditions remained weak overall since the previous report. Despite recent rains, severe drought conditions persisted in the Dakotas and Montana. “Farmers in many areas were cutting failed cereal crops for hay, while livestock producers were selling off parts of their herds due to a lack of feed,” the report said.
Meanwhile, crop conditions remained much better in eastern parts of the district, and sugar beet growers in Minnesota and North Dakota were anticipating a potential record crop.
In the Kansas City, Mo., region, the farm economy weakened, but at a slower pace, with subdued farm income and slightly lower farmland values. Crop prices decreased modestly in late July and August due to an increase in production expectations for the year. Livestock prices also declined modestly, and some cattle feedlots reported slight losses.
The Beige Book reported that although Kansas City district contacts continued to report a decrease in farm income and loan repayment rates, the pace of the decline was slower than in recent periods. “The continued decline in farm income again pushed farmland values lower, but only slightly, as values also appeared to stabilize in some parts of the district,” the report stated.
In the Dallas, Texas, region, crop conditions were boosted by above-average moisture levels and cooler-than-normal weather. Sorghum and corn crop yields were better than average. However, with the lower-than-breakeven prices, it will take well-above-average yields to offset the low prices, contacts noted.
“Cattle prices also trended lower, prompting some financial concerns for ranchers after several months of profitability,” the report stated. Agricultural producers are concerned about the renegotiation of the North American Free Trade Agreement, as many rely on export markets to sell their products.
Agriculture conditions across the Atlanta, Ga., district were mixed. Significant rainfall throughout much of the district eliminated drought conditions but resulted in many areas experiencing abnormally moist to excessively wet conditions. These heavy or frequent rains caused some crop damage and delayed planting and harvesting in parts of the district. Forecasts still indicate that the district will exceed last year’s production in cotton, soybeans and peanuts, but lower production is expected for rice and corn.
With harvesting completed for the current season, Florida’s orange production forecast was significantly lower than last year’s production. On a year-over-year basis, prices paid to farmers in June were up for cotton, beef, broilers and eggs but were down for corn, rice and soybeans.
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