CHICAGO — Agricultural conditions and economic indicators were mixed in the Federal Reserve Board’s third-quarter snapshot of the nation’s districts.
The Beige Book provides a summary of commentary from economists, market experts, bankers and others sources on economic conditions across the 12 Federal Reserve districts.
The information was collected on or before Oct. 15.
Seventh Federal Reserve District
“Greater-than-usual precipitation slowed the harvest and reduced the quantity and quality of crops, and expectations for net crop income fell accordingly. While expectations for yields were lower than in the prior reporting period, it was still likely that they would reach record levels,” according to the Seventh Federal Reserve District of Chicago report, which includes the northern two-thirds of Illinois and Indiana and all of Iowa, Wisconsin and Michigan.
“Contacts reported a notable drop in Chinese purchases of U.S. soybeans following an increase in Chinese tariffs.
“Farmers also faced higher transportation costs due to rail issues, a shortage of truck drivers, and complications in shifting export destinations away from China.
“Contacts expected the record yields and weak export demand to push crop storage to abnormally high levels. Hog and dairy prices recovered some, boosted in part by U.S. government purchases that were part of a program to compensate farmers for losses from higher foreign tariffs. Even so, dairy farmers continued to struggle.
“In addition, contacts viewed gains from the new U.S./Mexico/Canada Agreement as too small and too far in the future to help dairy farmers. Moreover, Canada and Mexico maintained their tariffs on agricultural goods (including pork and dairy) that they imposed in response to U.S. steel and aluminum tariffs.”
Eighth Federal Reserve District
Agriculture conditions improved slightly compared to previous reports from the Eighth Federal Reserve District of St. Louis The district includes the southern parts of Illinois and Indiana and eastern half of Missouri, as well as parts of Tennessee, Arkansas, Kentucky and Mississippi.
“Production and yield forecasts increased from August to September for corn and soybeans. Expected production levels also improved for cotton and rice during the same period, but yield forecasts decreased,” the Eighth Federal Reserve District summary stated.
“Relative to 2017, district corn, cotton, and soybean yields are expected to increase, but rice yields are projected to decline. Production levels of all four crops are expected to be greater than those from last year.”
Federal Reserve Bank Of Minneapolis
The Federal Reserve Bank of Minneapolis report stated agricultural conditions remained weak overall. The district includes all of Minnesota, the Dakotas and Montana, northwestern Wisconsin and all of Michigan’s Upper Peninsula.
“Persistent rain in early fall delayed or slowed harvests in some areas. Very strong harvests were expected around the district, including potential record yields in some cases. However, commodity prices remained weak, and greater production was not expected to completely offset the negative impact of low prices on farm incomes,” the report stated.
“International demand for crops, particularly soybeans, has fallen dramatically, according to contacts. A producer of dry beans reported that a large regular annual order from European Union countries was cancelled due to tariffs. A substantial number of dairy operations have exited the business since the beginning of the year.”
Federal Reserve Bank Of Kansas City
The Tenth Federal Reserve Bank of Kansas City, which includes the western part of Missouri, Kansas, Nebraska, Oklahoma, Wyoming, Colorado and the northern part of New Mexico, reported the farm economy remained weak.
“Expectations of increased production contributed to a slight decline in corn and soybean prices since the previous reporting period. Corn and soybean production was expected to be strong in Nebraska, which could offset some adverse effects of low prices. Crop yields in Missouri, however, weakened considerably from a year ago and could further strain farm income,” according to the report.
“The price of wheat was down slightly from the previous reporting period, but remained higher than a year ago. In the livestock sector, the price of cattle increased slightly from the previous period, but remained lower than a year ago as inventories generally remained high. In contrast to the prices of other agricultural commodities in the district, hog prices increased sharply in September due to expectations of lower production and higher exports.”