On Wednesday, the Federal Reserve Board released its May 2023 Beige Book Update, a summary of the Federal Reserve District’s comments on the current state of the economy. The report contained several comments of US agriculture.
* Sixth Circuit – Atlanta – “Farming conditions have deteriorated since the last report. Demand for cotton remained weak, resulting in many farmers planting less cotton than a year earlier. The demand for cattle was strong. Poultry meat producers continued to struggle as export restrictions due to bird flu have led to domestic oversupply. Domestic egg demand remained high. Milk consumption went down. Demand for citrus has remained strong despite lower production.”
* Seventh Circuit – Chicago – “Expectations for 2023 7th Ward farm incomes declined somewhat as prices of key commodities fell.
Corn and soybean prices fell as rapid field work and planting progress raised expectations of a big harvest. Soft red wheat prices remained weak, but hard wheat prices rose due to the drought that affected much of the US wheat crop and uncertainty about a further extension of the deal allowing exports from Ukraine.
“There were lower prices for eggs and dairy, especially cheese. Hog prices rose from a low level and cattle prices rose. With higher interest rates, the contacts expected farmers to conserve working capital to minimize the need for farm business loans.
“There were reports of slower agricultural machinery sales, but also of shortages in some types of equipment. Farmland prices rose again as demand remained solid and inventories of farms for sale were limited.”
* Eighth Ward – St. Louis – “General conditions have remained unchanged, however the outlook has softened slightly since our last report. Most farm contacts interviewed reported that their costs, including labor costs, had increased, contributing to a slight increase deteriorating prospects. The percentage of row crops planted has increased since the last reporting period, as expected, and is slightly above this point in 2022. The trend in hectares planted is uneven across the district: some states, such as Missouri and Illinois, have improved significantly compared to last year year, and the other county states fared slightly to significantly worse.”
* Ninth Ward – Minneapolis – “Agricultural conditions in the district were sound at the start of the planting season. About half of respondents to a survey of farm credit conditions said farm incomes increased in the first quarter from a year earlier.
Lenders noted improvements in producers’ liquidity and financial position, but were concerned about volatility in commodity prices and rising interest rates.
“Heavy winter snowfall and prolonged cold weather will significantly delay spring planting in some areas, contacts reported.”
* Tenth Ward – Kansas City – “Agricultural conditions in the Tenth District remained good until early May but showed signs of moderation. Corn and soybean prices fell slightly since April and were moderately lower than a year ago. Prices have recently fallen on reports of ideal planting conditions in most states and early predictions that production could reach record levels due to historically high yields. Wheat prices have risen slightly since April, but Poor yields caused by drought could limit revenue, particularly in Kansas and Oklahoma. Ranchers’ profits continued to be squeezed by high feed costs and drought, which affected grazing conditions across the region.”
* Eleventh Circuit – Dallas – “Recent rains improved drought conditions in the eastern portion of the district, while severe drought continued in much of the western portion. Grain prices generally declined over the periodgiven a positive outlook for US crop production this year. Drought will affect crop production in TexasHowever, the contacts are expecting a below-average cotton harvest this year. A bright spot for agricultural producers is on the livestock side, where Beef prices have risen significantly over the past six weeks and are well above last year’s prices, helped by tighter supply and solid demand for beef.”
* Twelfth Ward – San Francisco – “Conditions in agriculture and resource-related sectors weakened slightly. Export reports were mixed as ocean freight costs fell somewhat. while the war in Ukraine continued to disrupt shipping. Contacts in California found that wet weather conditions reduced cabbage and berry yields. Rainfall also disrupted pollination of tree and vine crops, which is expected to reduce yields. According to reports, seafood stocks in the Pacific Northwest have been stable. The contacts noted lower costs for transportation and irrigation higher costs for other inputs such as packaging, fertilizer and energy.”
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