Keith Good: Beige Book — Observations on Ag Economy

    The Federal Reserve Board has 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- “Replanting of crops due to extended winter weather was completed and wheat harvesting finished up in the Carolinas, according to an agriculture contact. Overall, fertilizer prices remained steady, while agricultural chemical prices and crop seed prices increased slightly. Some agribusiness owners reported lower commodity prices compared to last year.”

    Sixth District- Atlanta- “While much of Tennessee, southwest Louisiana, and the southernmost tip of Florida continued to experience abnormally dry conditions, most of the District was drought free. Some areas received excessive rain causing delays in production although recent, dryer weather conditions allowed planting to continue. Regional producers benefitted from higher prices for many of their agricultural products, lower costs for feed and fertilizer, and fuel costs leveling off. Recent record- high prices in cattle and hogs were attributed both to growing international demand and to domestic supply constraints.”

    Seventh District- Chicago- “The District’s corn and soybean crops made up ground after a late start to planting as favorable weather helped plants emerge more quickly than the five-year average. The consensus among contacts was that the corn and soybean crops were in excellent shape, but were unlikely to set records when harvested because of the late plantings. Corn, soybean, and wheat prices moved down during the reporting period. More farmers than a year ago took advantage of the spring rally in crop prices to lock in a profit on a larger portion of their expected harvest. Hog prices moved higher as disease affected supplies. Farmers received lower prices for milk and cattle, yet these prices remained well above levels necessary to cover the costs of production.”

    Eighth District – St. Louis- “As of late June, District farmers had completed the corn, cotton, and rice plantings. In contrast, soybean and sorghum plantings were behind the 5-year average rate of progress in Tennessee, Arkansas, Mississippi, and Kentucky. Over 90 percent of the District’s corn, cotton, rice, sorghum, and soybean crops were rated in fair or better condition. The winter wheat harvest was behind its 5-year average rate of progress for all District states.”

    Ninth District- Minneapolis- “District crop producers made progress catching up on a late spring, but flooding due to heavy rains led to crop losses in some areas. Corn and soybean emergence rates were consistent with five-year averages, and most crops were in good or excellent condition. District producers planted fewer acres of corn and more soybeans this year, in line with expectations. The USDA forecasts solid harvests and a slight reduction in crop prices by the end of the year. Prices received by farmers fell in June from a year earlier for corn, soybeans, wheat, and hay; prices increased for cattle, hogs, poultry, eggs, and milk.”

    Tenth District- Kansas City- “Heavy summer storms in June improved soil moisture for developing crops and pastures but also caused some wind, hail and flood damage. Wet fields delayed the winter wheat harvest in Oklahoma and Kansas, and yields depended on the extent of drought, freeze and hail damage. Despite expectations of a poor wheat harvest in much of the District, wheat prices fell since the last survey period. The corn and soybean crops were in good condition overall, and improved growing conditions led to a drop in prices for both crops. Cattle prices continued to rise, but feeder cattle prices have recently increased much faster than fed cattle prices and narrowed margins for feedlot operators. The cumulative effect of reduced piglet numbers due to the swine virus and strong export demand for pork supported further gains in hog prices, even though pork production forecasts were raised due to heavier dressed weights and higher than expected slaughter in the second quarter.”

    Eleventh District- Dallas- “District drought conditions eased over the reporting period. Widespread rains greatly improved prospects for row crops, especially cotton, but came too late to aid the Texas wheat crop, which is expected to be down 20 percent this year. Most crop prices declined over the past six weeks due to expected stronger U.S. production. Pasture conditions improved and cattle prices continued to set new historical highs. Domestic demand for beef remained very strong despite record prices, while international demand for cotton remained low.

    Twelfth District- San Francisco- “Contacts indicated that drought conditions contributed to reduced production of some agricultural and resource-related goods. Contacts expressed ongoing concerns about water costs and availability. They also mentioned that it would be challenging for regulatory agencies to address issues related to pricing and prioritizing limited water supplies if low levels of rainfall and snowpack persist next year. Contacts observed reductions in herd sizes and plantings of annual crops, including tomatoes and rice. Most permanent crops, including nut and fruit trees, have not been affected yet, but some farmers may choose to reduce new plantings or remove less productive orchards. Farmers in Idaho anticipate high yields of grains, wheat, and potatoes this year. Dairy operations continued to benefit from low feed costs.”

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