CHICAGO — Trade frustrations and crop prices continued to be among the areas of concern expressed in a survey across the Corn Belt’s Federal Reserve District.
The survey report features anecdotal information through the first two months of 2020. The Beige Book is a Federal Reserve System publication about current economic conditions across the 12 Federal Reserve Districts. It characterizes regional economic conditions and prospects based on a variety of mostly qualitative information.
“The outlook for crop farmers’ incomes deteriorated some in January and early February. Corn and soybean prices moved lower, though they remained higher than a year ago,” according to the Seventh Federal Reserve District of Chicago survey, which includes the northern two-thirds of Illinois and Indiana and all of Iowa, Wisconsin and Michigan.
There were reports in the Seventh District of farmers holding onto their stocks of crops with hopes of higher prices later in the year. Contacts expressed frustration that Chinese purchases of U.S. agricultural goods had not yet materialized following the announcement of the “Phase 1” trade deal and were concerned that the coronavirus outbreak would be used as an excuse for missing future trade targets.
“Contacts reported that the Market Facilitation Program was providing crucial income support to cushion the effects of the trade challenges with China and poor 2019 yields in much of the district. Milk and hog prices were down over the reporting period but were up compared to a year ago. Egg prices rebounded some, but cattle prices moved lower,” the Chicago district noted.
Wheat Acres
Eighth Federal Reserve District of St. Louis agriculture conditions have declined slightly from the previous reporting period. The number of acres of winter wheat planted this season declined slightly from acreage planted in 2019.
Farmers continue to emphasize the importance of MFP payments for supporting the industry. Eighth District contacts raised questions and expressed concerns regarding trade with China, including when the trade agreement provisions will apply and what impact coronavirus will have on commodity prices and agricultural purchases.
The Eighth District includes the southern parts of Illinois and Indiana and eastern half of Missouri, as well as parts of Tennessee, Arkansas, Kentucky and Mississippi.
More than half of the Ninth Federal Reserve District of Minneapolis agricultural lenders reported that farm incomes decreased in the previous three months relative to a year earlier, while 60% reported decreased capital spending.
The Minneapolis district includes all of Minnesota, the Dakotas and Montana, northwestern Wisconsin, and all of Michigan’s Upper Peninsula.
Stabilizing
Federal Reserve District of Kansas City farm economy remained subdued, but showed signs of stabilizing. Farmland values strengthened slightly in the most recent survey period, providing some stability for the sector.
Regional contacts in the Kansas City district reported that farm income and agricultural credit conditions generally remained weak, but deteriorated at a slower pace than previous survey periods. However, despite some signs of stabilization, geographic disparities persisted across the region.
Farm real estate values increased modestly on the eastern side of the district, while farm income and credit conditions were moderately weaker in the western portion.
“Some bankers commented that trade relief payments provided notable support to farm finances, but many also indicated that ongoing financial challenges continued to be driven by low agricultural commodity prices,” according to the Kansas City district report.
The Kansas City district includes the western part of Missouri, Kansas, Nebraska, Oklahoma, Wyoming, Colorado and the northern New Mexico.