June 15, 2024

Most Fed districts view ag conditions steady

CHICAGO — Agricultural conditions ranged from steady to slightly worse, according to the latest Federal Reserve Beige Book.

The Federal Reserve System publication is intended to characterize the change in economic conditions since the last report issued in late November.

Each Federal Reserve Bank gathers information on current economic conditions in its district through reports from bank and branch directors, plus interviews and online questionnaires completed by businesses, community organizations, economists, market experts and other sources.

Here are what the Corn Belt districts reported regarding the agricultural conditions.

Chicago

Net farm income in the Seventh Federal Reserve District was above average for 2023 according to contacts, helped by stronger than expected crop yields. However, expectations for 2024 farm income were lower, as prices started the year below break-even levels for many commodities.

Corn and soybean prices edged down during the reporting period while wheat prices were up a bit. Cost changes for crop production inputs were mixed.

Dairy, hog and cattle prices decreased. Egg prices were slightly higher and rising avian influenza cases led to concerns about a repeat of last winter’s large outbreak.

“Contacts felt district farms generally ended 2023 in strong enough financial positions to weather whatever 2024 brings,” the report stated.

The Seventh Federal Reserve 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 worsened slightly since the previous report, as ongoing droughts continue to effect crop and livestock conditions.

Of the district states reporting data through the end of December, the percent of winter wheat rated as fair or better was down only 2% relative to last year. Total wheat acreage in 2023 expanded significantly compared with 2022, returning to 2021 levels.

Conditions in Tennessee, where drought is the most extreme, declined more dramatically; the percent of Tennessee winter wheat rated fair or better fell 22 percentage points during the reporting period, ending at just 76%.

While drought conditions improved slightly in Tennessee over the reporting period, the extent of moderate to severe drought increased throughout the northern areas of the district at the same time.

Cotton and cattle farmers reported feeling the effects; some reported that they had to ship their cattle to other states as a result.

The Eighth 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 were unchanged in the Ninth Federal Reserve District since the last report.

Contacts across the region gave differing reports about farm incomes. Contacts generally agreed incomes were down substantially from a year ago, though some indicated they were stronger than expected.

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

Agricultural economic conditions in the Tenth Federal Reserve District were steady through December, but softening farm income and credit conditions remained a concern.

Crop prices were stable over the past month, ending 2023 considerably lower than a year ago. Profits narrowed the past year alongside the moderation in prices, particularly in areas where yields were impacted by drought.

Corn and soybean yields increased slightly from last year in Nebraska and parts of Kansas, but remained below the five-year average in all district states.

Despite some recent volatility, cattle prices were strong alongside low inventories and supported profitability for cow/calf producers.

“Many district contacts cited ongoing pressure from elevated production costs and higher interest rates as major factors for the outlook of the farm economy in 2024,” according to the report.

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