Fed survey finds steady ag conditions

CHICAGO — Agriculture conditions were flat to slightly improved across Corn Belt Federal Reserve districts, the Nov. 30 Beige Book reported.

The survey-based Beige Book publication summarizes comments received from contacts outside the Federal Reserve System on the current economic conditions and is not a commentary on the views of Federal Reserve officials.

The November report was prepared by the Federal Reserve Bank of Boston based on information collected on or before Nov. 22.

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

Chicago

“Overall, expectations for district agricultural income in 2022 rose a bit since October, reflecting the strong corn and soybean harvests. Despite pockets of poor yields from drought, district corn and soybean yields were close to the records set in 2021,” according to the Federal Reserve Bank of Chicago summary.

Barge shipments continued to be constrained due to low water levels on the Mississippi River, pushing up shipping costs, limiting exports and reducing the availability of chemicals and fertilizers.

The costs of most inputs remained elevated. Corn prices were lower, while soybean prices moved higher.

Dairy and hog prices were generally down, though egg and cattle prices were up.

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

Agricultural conditions in the 8th Federal Reserve District have remained unchanged compared to the previous reporting period.

Production forecasts for corn and cotton have increased slightly, while forecasts for soybeans remained unchanged and rice declined.

On a year-over-year basis, however, production levels for cotton and soybeans are expected to be slightly higher, while corn production is expected to slightly decline and rice production is expected to moderately decline.

While production has remained relatively steady, contacts in the district remain concerned over rising input prices, specifically fertilizers and feed.

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 remained strong through harvest season.

According to the Minneapolis Fed’s October agricultural credit conditions survey, nearly three-quarters of lenders reported farm incomes increased from July through September compared with the same period a year earlier.

Farm household spending, capital spending and loan repayment rates also increased on balance, while demand for loans fell.

However, cattle ranchers in Montana reported culling herds due to high feed costs and lack of available hay in the drought-stricken state and were reportedly reducing their planned capital expenditures for 2023.

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 generally remained strong despite slightly lower commodity prices and intensifying adverse effects of drought in certain areas of the 10th Federal Reserve District.

Overall, farm income and credit conditions continued to improve modestly. However, contacts in areas most impacted by drought reported that farm income and liquidity were slightly lower than a year ago.

As harvest neared completion, crop yields were generally expected to be less than average across all states and were particularly poor in Kansas and Oklahoma.

Dry conditions also reduced hay production throughout the region and are likely to push feed expenses higher for many livestock producers.

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