March 29, 2024

Federal Reserve survey: Ag sector outlook remains upbeat

CHICAGO — Agriculture saw improved financial conditions overall and rising land values during October and early November, according to a Federal Reserve survey.

This was the second consecutive Beige Book report that noted the overall economic activity in the nation grew at a “modest to moderate pace.”

The report was prepared at the Federal Reserve Bank of Chicago based on information collected on or before Nov. 19 and was released Dec. 1.

The document summarizes comments from contacts outside the Federal Reserve System and is not a commentary on the views of Federal Reserve officials.

Comments were received from contacts outside the Federal Reserve System collected from bank and branch directors, plus interviews and online questionnaires completed by businesses, community organizations, economists, market experts and other sources.

Here are the agriculture-related comments from districts in the Corn Belt.

Chicago

Seventh Federal Reserve District contacts said expectations for farm incomes in 2021 moved up, driven by stronger than anticipated corn and soybean yields.

Survey respondents said the soybean harvest would likely set a district record and the corn harvest would likely be the third largest ever.

Despite a sizable harvest, corn prices moved higher during the reporting period. Soybean prices languished, but were still above year-ago levels.

Farmers were reportedly purchasing inputs for 2022 ahead of their normal schedules because of concerns about future prices and availability of fuels, chemicals, fertilizers and seeds.

Prices for hogs and eggs edged lower. Cattle and dairy price movements were mixed.

Agricultural land values moved sharply higher.

The Chicago district includes the northern two-thirds of Illinois and Indiana, all of Iowa, the southern two-thirds of Wisconsin and Michigan’s Lower Peninsula.

St. Louis

“District agriculture conditions have remained stable compared to the previous reporting period. Production forecasts for corn and soybeans have declined slightly, while forecasts for cotton remained unchanged and rice increased,” according to the 8th District respondents.

On a year-over-year basis, however, production levels for corn and soybeans are expected to be moderately higher, while cotton and rice production is expected to moderately decline.

While production has remained relatively steady, contacts in the district have expressed concern over rising input prices, specifically nitrogen and other fertilizers, and labor shortages, which they fear may cause production shortfalls next year.

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

District agricultural conditions improved overall, though drought took a heavy toll on certain areas and commodities.

Responses to a survey of agricultural lenders indicated increased farm income, as producers continued to benefit from strong commodity prices and government payments.

Drought damage was not as bad as expected in general, though ranchers saw heavy losses, and damage to crops was much more severe in the western Dakotas and Montana’s wheat-producing region.

In other areas, though, crop yields will decrease, timely rains for many were helpful and higher crop prices appear to have more than offset the financial loss.

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

Kansas City

Economic conditions in the 10th District’s agricultural sector remained strong amid continued strength in commodity prices.

The price of all major crops remained elevated and harvest estimates in November indicated that both corn and soybean production are expected to be at high levels across the district.

Cattle prices increased modestly to above pre-pandemic levels in early November.

With healthy conditions across the sector, farm real estate values increased sharply from a year ago.

District contacts continued to express concerns about high input prices, yet farm income and credit conditions continued to improve and were expected to remain strong in the coming months.

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

Tom Doran

Tom C. Doran

Field Editor