Yesterday, the Federal Reserve Board released its Summary of Commentary on Current Economic Conditions. Commonly referred to as the “Beige Book,” the report included the following observations with respect to the U.S. agricultural economy:
* Fifth District- Richmond– “Agricultural activity increased modestly since our previous Beige Book report. Fifth District farmers stated that spring planting of cotton, peanuts, and corn was complete. Farm input prices remained unchanged in recent weeks while prices of grains, cotton, and corn declined. While the damage has yet to be assessed, sources in West Virginia expect that recent severe flooding will force farmers in some areas of the state to plow under their crops in the weeks ahead.”
* Sixth District- Atlanta– “Agriculture conditions across the District were mixed. Drought conditions spread through much of the region, ranging from abnormally dry to severe drought. Nonetheless, by mid-June, District cotton, soybean, and peanut planting were close to their five-year averages and nearing completion. On a year-over-year basis, prices paid to farmers for corn, cotton, rice, soybeans, beef, broilers, and eggs declined, although on a month-over-month basis, prices increased for corn, cotton, soybeans, and broilers.”
* Seventh District- Chicago– “Prices for corn and soybeans rallied through the reporting period, though corn prices gave back all of their gains in the second half of June. The price gains led more farmers to lock in prices for the fall harvest, though the increases were not enough to change contacts’ expectations that farm incomes will be weak this year. Corn and soybean plants were generally in good shape in most of the District, though contacts said that if the hotter- and drier-than-normal weather persisted much longer, yields could drop. Margins for dairy and beef producers continued to be tight because of low prices. Hog producers, on the other hand, were doing better because of higher-than-expected prices.”
* Eighth District – St. Louis– “Most fields were unscathed by the heavy rain in May and early June. About 94 percent of both District corn and soybeans were rated fair or better as of mid-June, which is around 5 percentage points higher than their 5-year averages for both crops. Among major District row crops, rice is the only crop with a lower rating than its 5-year average. With healthy fields and the recent crop price rally, row crop farmers are set to experience significant income improvements relative to 2015.”
* Ninth District- Minneapolis– “District agricultural conditions improved slightly, thanks to strong growing conditions and small increases in some commodity prices from their recent lows. Coming off an early start to planting, most of the District’s corn, soybean, and wheat crops were rated in good or excellent condition as of late-June. A chicken processing plant in Minnesota was undergoing a major expansion. Prices received by farmers increased in May from a year earlier for corn, soybeans, and turkeys; prices for wheat, hay, cattle, hogs, chickens, eggs, and milk fell from a year earlier.”
* Tenth District- Kansas City– “District farm revenue improved modestly from the previous reporting period. Despite market volatility, corn and soybean prices rose modestly due to international production concerns, providing some relief to persistently weak profit margins in the District’s farm sector. Wheat prices remained flat compared to the previous survey period, and profit margins remained tight even though early reports of harvested yields have been strong. In the livestock sector, hog prices rebounded to year-ago levels and were generally above the breakeven cost of production. Conversely, cattle prices declined slightly from the previous reporting period due to slightly softer demand which continued to suppress profits in the District’s cattle sector.”
* Eleventh District- Dallas– “Production prospects for crops remained strong across most of Texas thanks to good soil moisture and favorable weather. Crop prices generally improved over the reporting period and, while still fairly low, some pushed above break-even levels. Developments on the livestock side were mixed. While measurable rainfall across the state continued to benefit pasture conditions, cattle prices fell and feed costs rose.”
* Twelfth District- San Francisco– “Activity in the agriculture sector picked up over the reporting period. Increased water supply following a wet winter has improved growing conditions in California and other states, boosting yields and quality for various crops. Demand for beef cattle strengthened, and contacts noted that ranchers were beginning to realize profits after a prolonged period of losses. Overall, the strong dollar continued to hold down exports for most goods. However, strong demand from Asia boosted exports of pork products, while lingering overseas supply shortages from last year’s avian influenza outbreak boosted exports of poultry products.”
