FarmPolicy

April 22, 2019

Federal Reserve Beige Book: Observations on the Ag Economy- December 2014

Today 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– “District agribusiness conditions were reported as stable. A grower in South Carolina completed peanut harvesting, and one in West Virginia finished wheat and cover crop harvesting. Dry weather in eastern Virginia delayed tree harvests. A North Carolina contact reported higher year-over-year orders for Christmas trees from big-box stores. Soybean harvesting was half-completed in South Carolina and in West Virginia, where yields were above average. Demand for wood pellets increased. Farmers reported lower crop prices and higher poultry, cattle, and swine prices than a year ago. Input prices rose since the previous report. Some growers planned fewer equipment purchases relative to a year ago.”

* Sixth District- Atlanta– “Large parts of Alabama and Georgia — and to a lesser extent, parts of the Florida panhandle, Louisiana, and Mississippi — experienced varying degrees of drought ranging from abnormally dry conditions to a few isolated areas of severe drought. Although heavy rain in early October delayed peanut harvesting in some parts of the District, harvests in Alabama, Florida, Georgia, and Mississippi were ahead of their 5-year average. Alabama and Georgia cotton crop harvests were ahead of their 5-year averages while recent rain in parts of Tennessee delayed some of their cotton harvesting activities.”

* Seventh District- Chicago– “The District harvest was behind a normal year’s pace even before early snows delayed progress in some parts of the District. Still, yields should set records for the District overall. Corn and soybean prices moved up during the reporting period, driven by the slow harvest, farmers storing much of the crop for later sale, and some shipping delays. Wheat prices rose as well. Milk and hog prices declined from the prior reporting period, but operations remained profitable. Cattle prices moved higher with signs of herd expansion. Weights for hogs and cattle at slaughter were very high, helping boost the supply of meat coming to market.”

* Eighth District – St. Louis– “As of early November, the harvest of District corn, rice, and sorghum crops was over 90 percent complete, and the harvest of District soybean and cotton crops was close to 80 percent complete. District farmers will see substantially larger field crop production in 2014 than in 2013. Specifically, the District corn and soybean crops will be 7.5 and 15.1 percent larger, respectively, in 2014 than in the previous year.”

* Ninth District- Minneapolis– “Overall agricultural conditions improved from the previous report. Early estimates of crop production indicated record soybean harvests and a very large corn crop in District states. However, farm incomes continued to be affected by lower crop prices; in contrast, livestock and dairy producers benefited from lower feed costs and high output prices. Relative to a year earlier, prices received by farmers in October were lower for corn, soybeans, wheat, and hay; prices were higher for cattle, hogs, poultry, and milk.”

* Tenth District- Kansas City– “Farm income expectations fell sharply since the last survey period as above- average corn and soybean yields were not expected to fully offset low crop prices. District contacts reported current levels of farm income that were significantly lower than last year despite some support from crop insurance and strong profits in the livestock sector. Although reduced income for crop producers had contributed to a rise in the need for short-term loans to the farm sector, agricultural bankers reported that sufficient funds were available for qualified borrowers. Following several years of very strong growth, District cropland values declined slightly in recent months and were holding just above year-ago levels. However, improved profitability in the livestock sector and the potential for herd rebuilding had supported demand for high-quality pasture and contributed to moderate gains in ranchland values.”

* Eleventh District- Dallas– “Recent rainfall improved soil moisture, although drought conditions remained severe in some northern parts of Texas. Harvesting wrapped up for most spring crops. Yields were generally strong and well above 10-year averages. Improved conditions for cotton allowed for more acres to be harvested this year than in the recent past, although the rains during harvest time have had an adverse effect on cotton quality. Dairy producers have had a tremendous year with good margins, but milk and dairy prices have fallen lately, reflecting shrinking exports and increased world production.”

* Twelfth District- San Francisco– “Agricultural conditions in the District were mixed during the reporting period. In general, the continuing drought in California depressed yields for crops such as raisins and almonds. However, tomato production and prices hit record highs. Washington saw very strong apple and pear harvests and an increase in agricultural exports. Idaho farmers reported an excellent potato harvest, but late-season rains damaged wheat and barley crops.”

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Ag Economy; Policy Issues; Biotech; Biofuels; Budget; and, Tax Extenders

Agricultural Economy

Jacob Bunge and Jesse Newman reported in today’s Wall Street Journal that, “Illinois farmer Darrel Gingerich harvested a huge corn crop this autumn thanks to near-flawless weather. Now, he is stashing it away.

“‘I didn’t sell any more than we had to in order to cover our costs for this year,’ the 53-year-old said.

“Mr. Gingerich is one of many Midwestern farmers who decided to hold on to their crops as they watched prices languish over the summer. Their collective strategy has since paid off, helping to fan a 15% rise in corn futures and a 10% jump in soybean futures since September that is also the result of a slow U.S. harvest and gains in other agricultural markets. Corn’s gain over the roughly two-month harvest period of October and November was its largest for that span in eight years and second largest in more than three decades, while soybeans’ climb was the biggest in five years.”

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