May 21, 2024

Federal Reserve survey: Ag conditions mixed bag across Corn Belt

CHICAGO — Agricultural conditions were somewhat mixed, with drought conditions and lower commodity prices reported in parts of the Corn Belt, according to survey results in the Federal Reserve’s “Beige Book.”

The Federal Reserve System publication focuses on the current economic conditions across the 12 Federal Reserve Districts.

The report was prepared by the Federal Reserve Bank of Kansas City based on information collected on or before Aug. 28.

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

Here are the agricultural-related comments from Corn Belt districts:

Chicago

District farm income expectations for 2023 remained much lower than 2022 levels. However, reduced costs for some inputs, particularly fertilizers, boosted net income prospects for 2024, according to the Seventh District of Chicago.

Drought concerns lessened overall, although hot weather toward the end of the period impaired development of a wide swath of Midwest crops.

Corn, soybean and wheat prices were down. Still, there were reports of a slowdown in exports as prices offered by other producers were more favorable on world markets.

Hog prices moved down after hitting a seasonal peak. Prices for dairy products rose from low levels, and egg prices crept up a bit.

Cattle prices increased once again, remaining one of the few agricultural prices above the levels of a year ago.

Farmland prices were still higher than a year ago.

The Seventh Federal Reserve District of Chicago 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 District agricultural conditions have been mixed since the previous report. Despite record-breaking heat and heat-dome-induced thunderstorms across the district, the percent of cotton and rice rated fair or better stayed stable throughout the reporting period, with cotton returning to 2021 rating levels after a moderate dip in 2022.

Corn and soybean ratings both decreased more significantly during the summer months, sustaining their fall below 2020-2021 levels the previous year.

“District contacts described feeling the effects of extreme weather and increased interest rates in the form of higher input costs. On net, contacts indicated a slight decline in dollar value sales and an increase in inventories,” the report stated.

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

Agricultural conditions weakened slightly in the Ninth District. More than a third of respondents to a survey of agricultural credit conditions reported that farm incomes decreased in the second quarter from a year earlier.

Several contacts noted that while commodity prices were still favorable, they were retreating to levels that could be below break-even for some producers given high input costs.

Drought conditions improved recently, but remained a concern, especially in eastern portions of the region.

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

“The farm economy in the 10th District remained strong, but conditions softened alongside lower agricultural commodity prices and persistent drought. Volatility in markets for major crops was elevated amid heightened uncertainty about supply and demand conditions,” according to the survey.

Through mid-August, prices for corn and wheat were about 10% lower than the beginning of the month and soybean prices also dropped slightly.

In the livestock sector, cattle prices remained strong and continued to support profit opportunities, despite considerable cost pressures.

Large areas of the region continued to be heavily impacted by drought that could reduce crop revenues and limit availability of feed for livestock operations.

District contacts continued to highlight input costs, interest rates and thinner margins as other key concerns. Lenders indicated that credit conditions remained sound with support from strong farm finances.

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