November 30, 2022

Weather concerns reflected in Fed survey

CHICAGO — Adverse growing conditions are among the concerns noted in several Federal Reserve districts as reported in the latest Beige Book.

The Federal Reserve’s survey-based publication is based on information collected on or before Aug. 29. The document summarized comments received from contacts outside the Federal Reserve system.

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

Chicago

“Agricultural income prospects for 2022 were little changed, with contacts continuing to expect that most producers would turn a profit this year. Although portions of the district were in drought, farms were generally expected to have at least average yields for corn and soybeans,” the Federal Reserve Bank of Chicago stated.

Crop progress was behind the typical pace due to late plantings, but was catching up.

Corn, soybean and wheat prices were down from the previous reporting period, as were prices for milk and eggs.

Hog prices declined slightly from a high level, while cattle prices edged up.

Strong demand for agricultural equipment continued, with long lead times for delivery.

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

Eighth Federal Reserve District agriculture conditions have moderately worsened since the previous report. Compared with the previous reporting period, crop conditions in the district have either slightly declined or remained relatively unchanged.

Relative to the previous year, the percentage of corn, cotton and soybeans rated fair or better sharply declined, while the same measure for rice slightly increased.

Worsened conditions may be partially attributable to the droughts and severe flooding that have affected the district, especially in Missouri and Kentucky.

Additionally, district contacts indicated that farming conditions remained strained due to input prices and labor shortages, with the ability to hire quality labor being their biggest concern.

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

Ninth Federal Reserve District agricultural conditions strengthened modestly since the previous report, with notable exceptions.

A survey of agricultural credit conditions pointed to continued growth in farm incomes; 80% of farm lenders said incomes in their area increased in the second quarter from a year earlier.

While lenders reported continued concerns about rising production costs, commodity prices were strong enough to offset them.

However, wheat and small grains production in Montana will be severely impacted by drought for the second year in a row.

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

Conditions for the Tenth District’s farm economy remained favorable, supported by the overall strength in commodity prices, despite elevated volatility in certain markets in recent months.

Crop prices remained generally higher than a year ago, but were lower in August compared to earlier in the summer. Specifically, corn and wheat prices declined moderately and soybean prices also dropped slightly during the past month.

Heightened production costs and adverse growing conditions were worse than the national average in some district states over the past month.

Several farmers noted that, even with elevated levels of revenue expected this year, net income levels would likely be more subdued.

In the livestock sector, profit opportunities remained sound as cattle prices were slightly higher than the previous reporting period and hog prices increased notably.

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