September 26, 2021

Federal Reserve survey: Contrasting crop conditions across Corn Belt

CHICAGO — The U.S. economy strengthened further from late May to early July, displaying moderate to robust growth while the agriculture sector continued to have mixed results across Federal Reserve System districts.

A summary of economic conditions was released July 14 in the Federal Reserve’s Beige Book based on information from bank and branch directors, plus interviews and online questionnaires completed by businesses, community organizations, economists, market experts and other sources.

The report is based on information collected on or before July 2. Here are the Corn Belt comments relating to agriculture.

Chicago

Respondents in the Federal Reserve Bank’s 7th District reported that agriculture stayed on course to earn higher market-based incomes relative to last year, as most product prices remained high enough to offset increased costs for freight, energy, fertilizers and labor.

“On net, corn prices were little changed, while soybean prices were a little lower over the reporting period. Although planted corn and soybean acreage was up from last year, it was lower than expected earlier in the growing season, which helped maintain prices,” the reported stated.

Crop conditions for corn and soybeans were mixed, as some parts of the district were in excellent shape and others were stressed by drought.

Hog and milk prices eased off highs during the reporting period, while cattle prices were flat.

One contact noted that a lack of workers in slaughterhouses had led to the suspension of some contracts with poultry producers. Farmland values moved higher again.

The Chicago district includes the northern two-thirds of Illinois and Indiana and all of Iowa, Wisconsin and Michigan.

St. Louis

District agriculture conditions declined modestly relative to the previous reporting period, but remain steady relative to the same period last year.

Between the end of May and end of June, the percentages of corn, cotton, rice and soybeans rated fair or better decreased modestly across the district.

The St. Louis Federal Reserve District includes the southern parts of Illinois and Indiana and eastern half of Missouri, as well as parts of Tennessee, Arkansas, Kentucky and Mississippi.

Minneapolis

The 9th Federal Reserve District’s agricultural conditions continue to benefit from strong agricultural prices. However, severe drought conditions across most of the district had many crop producers concerned about yields, as most corn, soybean and wheat acres in the district were rated in fair or poor condition.

The Minneapolis-based district includes all of Minnesota, the Dakotas and Montana, northwestern Wisconsin and all of Michigan’s Upper Peninsula.

Kansas City

Agricultural economic conditions in the 10th Federal Reserve District were strong through June, with profit margins for most major commodities relatively high. Prices of most crops were still near multi-year highs, although had declined slightly since the previous reporting period.

Hog prices also remained strong. The winter wheat harvest was delayed slightly in parts of the district, but crop quality was not expected to be hindered and higher production was anticipated throughout the region.

In addition, the district’s corn and soybean crop was in slightly better condition than the nation in all states except Missouri. In contrast to other commodities, profitability for cattle producers continued to be limited.

Drought also persisted in some portions of the district and remained a concern for both crop and livestock producers.

The Kansas City district includes the western part of Missouri, Kansas, Nebraska, Oklahoma, Wyoming, Colorado and northern New Mexico.

Tom Doran

Tom Doran

Field Editor