Weather, income concerns across Corn Belt

CHICAGO — Agricultural reports across Federal Reserve Districts in the Corn Belt were mixed, as drought conditions eased in some districts, but farm finances and incomes remained a concern.

The Federal Reserve’s Beige Book provides survey-based summaries of economic conditions from early April to mid-May across 12 districts. The publication was released May 29.

The Beige Book is an accumulation of information on economic conditions 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 in the Seventh Federal Reserve District increased slightly, though income is still expected to fall below its 2023 level.

Widespread precipitation reduced the intensity of drought in Iowa, but also delayed corn and soybean planting after an early start. Corn, soybean and wheat prices moved higher.

Most livestock prices were up, though egg prices were down. Continuing concerns about the financial impact of avian flu in cattle were offset by additional support from the federal government. Butter and cheese prices rose, with reports of stronger exports.

Several contacts noted increased costs for repairs, machinery parts and fuel. Demand for operating loans was up, in line with lower levels of working capital for farms.

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

“Agriculture conditions have declined slightly since our previous report, with most contacts describing conditions as falling below expectations,” the report noted.

Eighth Federal Reserve District contacts were mixed on inventory, sales and capital expenditures and noted increased labor costs as an additional stressor.

Elevated rainfall and extreme weather events such as tornadoes continued to disrupt the planting progress for soy, cotton and corn across all district states, while rice planting progress remained similar to one year ago.

The most-active planting periods have either ended or will end in the next two weeks; however, soy, corn and cotton were all around 50% planted as of mid-May, down from over 90% planted at the same time one year ago and slightly below average over the past few years.

District contacts were mixed on inventory, sales and capital expenditures and noted increased labor costs as an additional stressor.

The Eighth Federal Reserve District headquartered in St. Louis 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 in the Ninth Federal Reserve District remained weak amid some positive developments.

Lenders responding to an agricultural credit conditions survey overwhelmingly reported decreased farm incomes in the first three months of 2024 relative to a year earlier, with expectations for further declines in the second quarter.

However, contacts in the industry reported that some moderation in input costs was expected to benefit producer margins.

Recent precipitation alleviated drought conditions in much of the region, and crop planting and progress was generally near average for early spring.

However, poor snow cover over the winter negatively impacted the quality of the winter wheat crop in the western parts of the district.

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

Conditions in the Tenth Federal Reserve District agricultural economy softened through early May and farm finances tightened slightly.

Corn, soybean and wheat prices increased slightly since April, but remained weak, keeping profit opportunities narrow.

Winter wheat conditions in Colorado and Kansas were particularly poor and raised concerns about reduced revenues while growing conditions in Oklahoma and Nebraska were comparatively better.

Corn and soybean planting was delayed in some areas of the region, which also raised concerns about future crop conditions.

In the livestock sector, cattle prices remained strong and supported profit opportunities for cow/calf producers.

“District contacts mentioned that financial stress has remained modest, but concerns about further deterioration were growing,” the report stated.

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