Income, weather top Fed report concerns

CHICAGO — While overall economic activity expanded slightly since late February, ag sector concerns remain due to income prospects and weather.

The Federal Reserve System’s Beige Book, published April 17, provided insights into economic conditions across all sectors in the 12 districts since early March.

The report is an accumulation of information on current economic conditions in its 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 regarding the agricultural conditions:

Chicago

“Prospects for 2024 farm income were little changed overall for crop and livestock producers with contacts continuing to expect incomes in 2024 to fall below 2023 levels,” the report said.

Fieldwork in preparation for planting was well ahead of the usual pace given warmer-than-usual temperatures.

Precipitation across the Seventh Federal Reserve District improved water levels, though some areas remained in drought.

Corn and soybean prices increased slightly amid expectations that farmers would plant fewer of these crops than earlier anticipated. Wheat prices were generally lower.

Egg prices fell, most dairy prices were down and hog prices were higher. Cattle prices rose despite a decline toward the end of the period after news of an avian flu outbreak in cattle raised concerns that beef demand would weaken.

The Chicago-based 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 remained unchanged since the previous report. Total acres planted as of the end of March are about the same as this time last year.

However, contacts in Arkansas said they’re closely watching weather over the next few weeks. If conditions remain wet, that will limit future plantings and may force producers to plant later than is ideal.

The distribution of crops is expected to shift: The number of acres of corn planted decreased, especially in Arkansas and Mississippi, while plantings of cotton, rice and soy increased. For corn and cotton, this marks a return to 2022 acreage.

Several district contacts reported feeling price pressures due to higher travel costs of bringing in H2A visa labor.

Contacts also noted difficulties accessing farming equipment due to high costs and delays, particularly for repairs.

The St. Louis-based 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 Federal Reserve District agricultural conditions were stable at low levels. Contacts expected decreased farm incomes in the region for the 2024 growing season.

Warm weather along with widespread mild drought conditions led to a mixed outlook heading into spring planting.

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 continued to moderate through the end of March.

Agricultural bankers reported a mild deterioration in farm borrower liquidity and a gradual softening in farm loan repayment rates.

Crop prices were subdued, and some contacts reported slightly higher instances of carryover debt than a year ago. Cattle prices remained strong, however, and provided ongoing support to the sector.

Elevated production expenses and high financing costs remained ongoing concerns for all types of operations. Drought was also cited as an issue in some areas of the region.

Farm real estate values increased at a slower pace compared to recent months, but valuations were strong despite the moderation in the farm economy.

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