Federal Reserve survey: Commodity, diesel prices hamper ag outlook

CHICAGO — Agricultural conditions across the Federal Reserve districts in the Corn Belt continued to be described as subdued due volatile commodity prices and a surge in diesel prices.

A summary of commentary on current economic conditions was published Oct. 14 in the Federal Reserve District’s Beige Book, reflecting activity since early September based on information collected on or before Oct. 5.

Each Federal Reserve Bank gathers information on current economic conditions in its 12 districts 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 in the survey regarding the agricultural conditions.

Chicago

Expectations for 2026 Seventh District farm income edged down over the reporting period, which included the start of harvest.

Heavy rains in much of the district slowed the harvest and were expected to lower yields for corn and, especially, soybeans. Farmers also were expected to spend more on fuel to dry bushels, compounding the effect of high energy prices on the costs of harvest.

“Corn and soybean prices again moved higher, with reports of premiums for current deliveries. Wheat and egg prices were higher, while cattle, hog and most dairy prices declined,” the report noted of the conditions as of Oct. 5.

“In parts of the district, crop insurance wasn’t expected to make up for lost income. Even so, some contacts expected farmers to replace equipment after holding off doing so in recent years.”

The Seventh 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

Agriculture conditions in the Eighth District have not changed since the September report.

“A contact in Tennessee noted that the 2026 crop should range from profitable to break-even, depending on yields and support from higher commodity prices,” the report stated.

“Grower sentiment is cautiously optimistic and less focused on immediate financial risk.”

In Arkansas, many acres previously planted with rice were replaced by soybeans or corn.

Dry conditions allowed several farmers to complete the harvest early without delays from storage or shipping.

Contacts reported strong yields for cotton, soybeans, rice and corn in Arkansas, while in Mississippi drought and high fuel costs reduced hay production.

Forestry contacts in Mississippi continued to report challenges stemming from high fuel and insurance costs, limited market access and difficulty thinning stands.

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 District agricultural conditions were unchanged since the previous report.

Early indications pointed to a significant decrease in corn production and quality in some areas compared with last year, due to impacts of summer heat and drought. Soybean and wheat production was also expected to decrease in the Ninth District. However, a recent rally in crop prices was welcome news to farmers.

Contacts were unsure what the net effect of higher prices and lower production would mean for incomes.

The Minneapolis-based Ninth 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 10th District were subdued alongside volatile commodity prices and increased input costs.

Crop prices rose notably in early September and stayed above year-ago levels, but market conditions were volatile, and a surge in diesel prices and severe drought in some areas raised concerns about costs and revenue.

A food manufacturer also cited diesel costs as a concern, with higher freight expenses expected to meaningfully affect operations and profitability.

Agricultural credit conditions deteriorated gradually. While high cattle prices provided support in some areas, many lenders noted that weakness in the crop sector had a modest negative effect on broader economic conditions.

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